Banks Sued in Overdraft Charges Case
The UK's 8 biggest high street banks face legal challenge to overdraft charges
21st Feb 2006
A 29 year old law student is to take on the combined legal might of the UK banking industry in a remarkable court case over charges imposed on customers who go overdrawn.
Stephen Hone, a member of the Bank Action Group, says that the imposition of penalty charges is unlawful when the level of the charge is greater than the actual cost to the bank.
While many customers have sued successfully in the small claims court, says Mr Hone, a legal declaration from the courts that punitive charging was illegal would swiftly put an end to excessive charges and even lead to customers being able to claim back any such charges made over the last 6 years.
Mr Hone says that he realises that the odds are stacked against his action, but that he is willing to go bankrupt in pursuing the action if he loses. The banks targetted by the case are Alliance and Leicester, Barclays, Co-op Bank, HBOS, HSBC, Lloyds TSB, Nationwide and NatWest, although any decision would effect the industry as a whole.
Overdraft charges are thought to earn banks up to £3bn a year, and so it can be assumed that the banks will vigorously fight the action.
Read More: Money Guardian : Banks face legal challenge over £3bn penalities on overdrafts
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