Page last updated at 10:36 GMT, Friday, 27 November 2009

Lloyds to ask local courts to dismiss overdraft cases

Lloyds TSB sign
Lloyds says it will ask for cases to be withdrawn where appropriate

Lloyds Banking Group has said it will ask local courts to dismiss thousands of overdraft cases lodged against it for the return of overdraft fees.

The claims have been on hold since July 2007 when a group of banks and the Office of Fair Trading started a test case over the fairness of bank charges.

The Supreme Court ruled this week that the OFT could not decide the charges were unfair under consumer legislation.

Lloyds Banking Group includes both Lloyds TSB and HBOS banks.

"As the judgement concludes the test case, the FSA [Financial Services Authority] has agreed that these complaints should no longer remain on hold," said a statement on the websites of both Lloyds TSB and HBOS.

"This means that for those customers who currently have an outstanding complaint about unarranged overdrafts, we'll be writing to them shortly to let them know what today's judgment means for them.

"We be asking the County and Sheriff Courts to apply the Supreme Court judgement to dismiss any claims they currently have on hold," it added.

Decision time

The OFT is currently pondering whether or not to attack the fairness of overdraft charges under other aspects of the consumer contract rules, or whether it should trigger a full scale competition enquiry into the bank's charges.

So far, none of the other banks have said exactly how they will approach the legal cases that have been stacked up in local courts.

A spokeswoman for the Lloyds Banking Group explained that its lawyers would be asking local judges to apply the principles of the Supreme Court ruling, and would ask for cases to be withdrawn where appropriate.

Later the bank softened its stance and said on its website: "We anticipate most cases in the County and Sheriff courts will be withdrawn."


Immediately after this week's ruling a spokeswoman for the judiciary said it was now up to either banks, or the claimants, to apply to the local courts to lift the stays on their cases, if they wished.

"Judges will consider such applications individually and make whatever orders they consider are appropriate in the case before them," the judicial communications office said.

As well as the cases in the legal system, more than one million similar complaints have been on hold at the UK's banks.

The banks are now likely to reject most of these complaints now that the FSA has said they must start processing them under the normal rules.

The Financial Ombudsman Service (FOS) has already said that most of the complaints that are on its books are now likely to be dismissed.

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