Brown: Banks must sort out charges swiftly

Thursday, 24 September 2009 02:21

Gordon Brown has pushed for a quick resolution over overdraft charges.

In a letter the PM called for the banks and the Office for Fair Trading (OFT) to hammer out a deal - as the court case over whether the watchdog can judge if fees for unauthorised overdraft charges are fair.

He wrote: "I believe a negotiated solution could be in everyone's best interest, so we have called on the banks and the regulators to explore a quicker way to resolve this without delay."

The case is now at the new Supreme Court - which has replaced the House of Lords law lords as the highest court in the land.

If the court finds in favour of the OFT, the banks could face massive compensation bills.

Complaints to the banks can still be made - directly or through the Financial Ombudsman Service (FOS) - but since July 2007, while the case is still rumbling on the FSA has allowed current account providers a waiver on dealing with the case.

Pressure is now mounting over how compensation should be paid if they court finds in favour of the FSA, with consumer groups pushing for automatic payouts and not a long process of claims.

Mr Brown wrote: "Once the legal issues have been resolved, any compensation that is due should be paid as swiftly as possible.

"I know that for the consumers fighting for fair treatment, the extremely lengthy legal process can be unacceptable."

He went on to welcome moves from Royal Bank of Scotland, NatWest, Halifax and Bank of Scotland - all of which the state now has stakes in via RBS and Lloyds Banking - for recently cutting charges.

The prime minister was responding to a letter from Martin Lewis, the man behind moneysavingexpert.com.

Mr Lewis welcomed the letter.

"Admittedly it was simply a cut and paste of the reply Gordon Brown sent in response to our open letter, but better late than never," he wrote in his blog.

"The hope now is that with bank charges having been a huge bubble in a political vacuum, politicians will finally pull their fingers out and smooth the flow of financial justice."

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