Following the issue of tens of thousands of claims regarding the unfairness of unauthorised overdraft charges in the county courts, the Office of Fair Trading, in agreement with seven banks and one building society (which together account for over 90 per cent of personal current accounts in the UK), commenced a test case in the High Court at the end of July. The OFT is seeking to establish that the unfairness rules in the Unfair Terms in Consumer Contract Regulations apply to these charges. The OFT claim that the charges are unfair and a penalty for breach of contract, and so unenforceable, rather than simply charges for the provision of services, as claimed by the banks. The OFT is seeking a preliminary declaration as to whether the ‘fairness’ test applies to bank charges. The trial has been expedited and is due to start in early January 2008 with a time estimate of 8 days.
Pending the outcome of the test case, the FSA has waived its complaints handling rules for any bank or building society that applies for the waiver. It is also likely that individual courts will agree, if the parties cannot, that until the outcome of the test case proceedings all other such claims issued should be stayed