Law Weblog

Bank charges – Supreme Court rules – customers lose

Wednesday 25 November 2009 at 6:45 pm | In News | Post Comment Today, the Supreme Court ruled in the test case of The OFT v Abbey National Plc & Others [2009] UKSC. It over-turns the decisions of the High Court and the Court of Appeal and finds unanimously for the Banks.

The Justices held that charges for unauthorised overdrafts are part of the price or remuneration of the services provided under the current account contract. As a result, these charges are not subject to an assessment of fairness under Regulation 6(2) of the Unfair Contract Terms in Consumer Contracts Regulations 1999 (“UCTCCR”).

However, the Supreme Court has left the door open for the OFT to assess the fairness of the charges on other grounds, including Regulation 5(1) which will deem a term unfair if it creates a significant imbalance between the parties and is, therefore, contrary to the requirement of good faith. This means, that while today’s decision has clarified the position somewhat and narrowed the grounds of investigation challenge for the OFT, the issue is by no means settled.