Barclays
Barclays ordered to suspend charges
A judge has told Barclays to stop applying overdraft penalty charges to one customer pending a High Court ruling.
Barclays Bank has been ordered to stop taking penalty overdraft charges from a customer's account until the test case over the penalty fees has been decided in the High Court.
Judge Abraham, of Luton County Court, made his decision after hearing Nadine Fry's case for reclaiming the penalty charges applied by Barclays. He adjourned the case until the outcome of the High Court test case, but said "until the expiry of the stay, no further penalty charges or interest on penalty charges should be debited to the claimants account by the defendent."
The judge's move will worry banks, as the High Court case is not due to be heard until February next year, but Judge Abraham's ruling will not set a precedent.
Hundreds of thousands of current account customers have reclaimed banks charges in the last 18 months. Some banks charge up to £39 each time their customer's slip into the red without permission.
Barclays has repaid nearly £90 million in overdraft penalty charges so far this year and the big five banks have handed over £400 million in refunds to customers since January.
A spokesman from Barclays said: "All county court judges are saying different things. This is why the banks are going to the High Court to get some clarity around this issue."
The Banks were given a reprieve from paying refunds for overdraft charges last month when seven major banking institutions, in conjunction with the UK's financial watchdog, the Financial Services Authority (FSA), and the Office of Fair Trading (OFT), launched a test case on the legality of overdraft penalty fees in the High Court.
If the ruling goes in favour of customers, it could cost the banks £10 billion. It could also lead to the end of "free" current accounts as banks try to recover costs.
Just days after the banks announced the High Court case, the financial regulator slammed banks and building societies for to threatening and lying to customers for making "false or misleading" statements to customers to deter them from reclaiming overdraft charges.
A spokesman from the Consumer Action Group said: "This is what should have been done from the start to maintain fair play."
(Published by Times Online, August 27, 2007)
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