The long running dispute between disgruntled bank customers and the high street banks over unauthorised overdraft charges shows no sign of an early resolution.

At the beginning of July, Mr Andrew Justice Smith announced at the end of a three day hearing, that no immediate ruling would be made regarding banks’ historic overdraft charges.

The High Court case had heard arguments on whether charges going back for years can be challenged by bank customers.

In the meantime, tens of thousands of cases brought by bank customers for the refund of bank charges have been held in abeyance, since the Office of Fair Trading and eight banks agreed on a test case in July 2007 to clarify the dispute.
The OFT has been seeking legal confirmation that it can rule if bank overdraft charges of up to £35 per item are fair or not, while the banks are fighting to maintain the £3.5bn a year of income they generate from customers going into the red without permission.

The banks are already appealing against the judge’s initial ruling that the OFT can assess whether the banks’ current fee agreements with their customers are fair or not.

At the hearing at the beginning of July, the judge said he needed time to consider the arguments on whether the fees banks have charged historically can be assessed for fairness and did not give a time when he would announce his decision.

Meanwhile, the Financial Services Authority has  extended for another six months, pending the outcome of the High court case, the ‘waiver’ of its normal rules,  whereby banks are required to deal with complaints promptly.

The waiver means that banks are not required to handle complaints relating to unauthorised overdraft charges within the time  limits set out under the FSA’s dispute resolution procedure.

But the watchdog says it will review the waiver again before the end of January 2009.

The regulator has also issued guidance stating that banks should waive future overdraft charges and not enforce past ones in ‘hardship’ cases, defined as being where a customer’s debts consist largely of previous overdraft fees.

But campaigners have hit back saying that the further delay before the tens of thousands of county court cases can be heard is unacceptable.

David Black, Defaqto banking principal said: “The case is likely to drag on for years as it may be referred to the European Court.  The ultimate result is likely to be the end of free banking as we know it.”

In the meantime, disgrunted bank customers can always switch to another bank. Take a look at the Defaqto current account Compare Tool:

http://www.defaqto.com/consumer/current-accounts/compare-current-accounts.aspx