Gordon Brown calls for quick bank charge compensation

Author: By Nicky Burridge, Press Association

Gordon Brown said a negotiated solution would be in everyone’s best interests,
and he urged the banks and the Financial Services Authority to explore ways
to resolve the issue without further delay.

In a letter to Martin Lewis, the founder of MoneySavingExpert.com, he said: “I
certainly agree that once the legal issues have been resolved, any
compensation that is due should be paid as swiftly as possible.

“How compensation should be paid depends on the how the case is resolved. I
know that for consumers fighting for fair treatment the extremely lengthy
legal processes can be unacceptable.”

The test case on the issue of unauthorised overdraft charges was jointly
launched by seven banks and a building society and the Office of Fair
Trading, after consumers started to reclaim millions of pounds paid in the
charges through the courts.

It is currently being heard by the House of Lords, and will be transferred to
the new Supreme Court when it opens next month, after the banks involved
appealed against the High Court and Court of Appeal decisions that the
charges did come under the scope of the OFT.

If the Supreme Court finds against the banks it will pave the way for a
further hearing to decide whether the charges are fair and, if not, what a
fair charge would be.

Banks have so far paid out £559 million in refunds to customers who have
reclaimed the fees, while nearly one million claims have been frozen while
the test case takes place.

Responding to Mr Brown’s letter, Mr Lewis, who has long campaigned on the
issue of unauthorised overdraft charges, said: “This is a major signal bank
charges has been pushed up the Government agenda.

“Assuming the Supreme Court rules that fairness rules apply, as the OFT’s
already indicated it believes charges are unfair, it’s game on.

“Yet the worry is banks will mount a further legal challenge to the OFT’s
ruling, traipsing through the courts again, and this is where the PM comes
in. By pushing for a negotiated settlement we could get a quick solution.”

He said such a settlement would mean that consumers did not need to go to
court or the Financial Ombudsman Service to get their money back, but would
simply be able to write to their current account provider and request it.

But he added: “While still a triumph, I believe it should go further still. As
banks unfairly took people’s money without asking, they should be given it
back without asking, otherwise we risk the illiterate or financially-phobic
missing out.”

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