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On 26th February 2009, the Appeal Court ruled that the Office of Fair Trading (OFT) has the power to investigate whether charges for unauthorised transactions are unfair and excessive when assessed under the Unfair Terms in Consumer Contract Regulations (UTCCR), confirming the earlier ruling from the High Court. This paves the way for the OFT to conclude their investigation into whether Bank Charges are unfair and excessive.

In addition to the unanimous decision of the three Appeal Court justices in favour of the OFT, Master of the Rolls Sir Anthony Clarke refused the Banks leave to appeal against the decision in the House of Lords. Whilst the Banks still have the right to request an appeal directly with the House of Lords, the fact that the third most senior judge in England & Wales has refused leave to appeal at this stage indicates that the judiciary believes the issues should be resolved by the OFT.

The fact that the Appeal Court has issued a unanimous decision in which they have refused leave to appeal, is a major success for the OFT and consumers. We trust that the Banks will now accept that they are unlikely to win this legal process and begin to work with the OFT to bring speedy resolution to this case, allowing consumers to secure a refund of the Bank Charges they have incurred.

Should the Banks proceed to request leave to appeal directly with the Law Lords, they will incur significant costs for the taxpayer who funds the OFT and the many of the Banks themselves. We believe that following such a clear judgement the Banks should now allow the OFT to decide on whether the charges are fair, although we await news on whether the Banks will appeal.

The OFT stated that it "welcomes the Court of Appeal's very clear confirmation today that the unarranged overdraft charging terms for personal current accounts can be assessed for fairness." The OFT must now conclude and publish a report into the fairness of charges, which it has been working on since April 2007. The OFT stated that they are "...now analysing the implications of the judgment for our ongoing investigation. The OFT has already written to the banks with its provisional view on the fairness of the terms, setting out its concerns that they may be unfair. We expect to reach a final decision on fairness later this year."

Should the Banks appeal to the House of Lords, the case will be unlikely to be resolved this year. The OFT indicates their report will be concluded later this year, although they do not provide a clear timeframe. We therefore believe that despite the Appeal Court ruling, consumers are unlikely to receive a refund of charges until the end of 2009.

Date Published:     26 February 2009

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