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Last Updated: Saturday, 27 January 2007, 14:53 GMT
Judge warns banks over charges
By Bob Howard
BBC Radio 4's Money Box

hands holding money
A judge has threatened to strike out the defence put forward by banks in bank charge cases unless they can prove they will contest them in court.

District Judge Toombs believes some banks are abusing the legal process.

Although banks begin legal action, so far all cases have been settled ahead of a formal hearing.

Consumer groups which advise people on reclaiming charges have welcomed the judge's intervention.

In orders seen by BBC Radio 4's Money Box programme, the Lincolnshire district judge has given one bank, Lloyds TSB, 14 days to detail all the claims it has pursued in the past and whether and when it has settled each of them.

Lloyds TSB sign
We believe that the order was legally flawed. Had we not settled we would have applied to set the order aside.
Lloyds TSB

Lloyds TSB confirmed it chose to settle the cases under discussion but in a statement questioned the judge's right to threaten to strike out its defence.

"The judge made his order without a hearing so we were not given a chance to make representations. We believe that the order was legally flawed.

"We judge cases on an individual basis and in this case made a decision to settle. Had we not settled we would have applied to set the order aside."

Thousands of customers have successfully used the county courts to reclaim their bank charges. But as settlements are typically reached at the eleventh hour, no legal precedent on the issue has yet been set.

The people who are claiming are being led a song and dance through the procedural obstacles of small claims litigation.
Marc Gander, the Consumer Action Group

The orders were welcomed by Marc Gander from the Consumer Action Group website which campaigns on behalf of customers reclaiming their charges. He said the judge's action was significant.

"The people who are claiming are being led a song and dance through the procedural obstacles of small claims litigation. Finally this judge is putting a stop to it."

Peter Cable from Newark in Nottinghamshire has received one of at least six orders believed to have been made by the same judge, and hopes others will follow suit.

"I think it would be a wake-up call for the banks. It would certainly make them realise they have to treat this issue seriously and it's not just an annoying instance which they hope will go away."

Judge Toombs' actions have been noted by other district judges, as they decide how best to deal with the thousands of bank charge cases reaching their courts.

Speaking on behalf of county court judges in London, Judge Paul Collins said: "Nobody can approve of the situation that exists at the moment which leaves so many people in the dark as to what the banks' real intentions are going to be.

"It would be very desirable to have a test case to see whether the arguments being put forward by the banks are sustainable or not."

BBC Radio 4's Money Box was broadcast on Saturday, 27 January 2007 at 1204 GMT.

The programme was repeated on Sunday, 28 January at 1502 GMT.

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