High Court rules against banks' penalty charges

OFT could now ask High Court for decision

Hosts could find it easier to reclaim penalty charges from banks in the future after a new legal ruling.

The High Court has ruled that penalty charges for exceeding overdraft limits can be unfair under UK law. Mr Justice Andrew Smith said regulations governing consumer contracts can apply to bank charges.

This paves the way for the Office of Fair Trading (OFT) to ask the High Court to decide if charges are unfair.

If the Court says they are, it will open the door for licensees to claim back penalty charges. A High Court hearing to discuss the next steps is due to take place on 22 May.

"This ruling looks to be a sensational victory for bank-charge reclaimers," said Martin Lewis, creator of MoneySavingExpert.com, which helps people reclaim charges.

"While the game's not over, we're now on the penalty spot ready to shoot at goal."

Hosts have successfully reclaimed penalty bank charges in the past. The most successful case was Tracey Bond of the Duke of York, Crediton, Devon, who clawed back almost £8,000 from NatWest.

Licensees who are trying to claim back money have had their cases put on hold until the case concludes.

But Lewis added: "It's crucial to start a reclaim now, as you can only go back six years. Delaying may mean you lose the ability to get old charges back."

Visit Lewis's website at www.moneysavingexpert.com/bankcharges for a free step-by-step guide and template letter.