Banks see early overdraft fee victory

Banks saw early victory today over the unauthorised overdraft fees.

At the High Court yesterday Mr Justice Andrew Smith ruled most bank customers will not be able to challenge overdraft fees between 2001 and 2007 under common law.

He ruled Barclays, Clydesdale and HSBC fees could not be challenged along with most of Abbey's terms.

No challenge would be allowed on HBOS overdraft fee terms, except for those with Intelligent Finance.

Further legal arguments remain for Royal Bank of Scotland and Lloyds TSB.

The case was brought by the Office of Fair Trading (OFT) with a group of seven banks and a building society in a bid to ascertain whether the watchdog could itself rule if charges were fair.

A spokesperson for the OFT said the decision "was not massive" and was tidying up loose ends.

"This is another staging post in a complex legal process," she said.

"We are progressing our investigation as quickly as possible and are in continuing discussion with the banks about our provisional views on the issue of fairness."

The main battle will be later this month when the banks appeal the victory from April.

During the case, the FSA has provided banks a waiver so they do not have to deal with complaints about unauthorised overdraft charges – either through the courts or the free Financial Ombudsman Service (FOS).