As the story of recent events in the banking sector unfolded, and as unprecedented amounts of taxpayers’ money was thrown at Britain’s banks, leading to their effective nationalisation, I’ve been wondering what has been happened in the ongoing litigation relating to penalty charges levied by banks on their customers, and about the implications of the changes in the banking sector.
Officially, a decision in the High Court in April 2008 ruled that bank charges were subject to a fairness test and that the Office of Fair Trading did have the right to assess them. An appeal by the banks concluded on 5 November 2008 and a decision is expected in early 2009.
Straws in the wind
Much of course depends on the outcome of the appeal. In the meantime the OFT has been investigating, and there are some indications of the way things are going. For example, one report claims that RBS staff have been told that OFT has “serious concerns” about the charges levied by the banks; another, more recent report quotes a leaked internal email to the effect that the same bank is gearing up to issue refunds pro-actively, i.e. without customers being required to claim. This may be no more than rumour, but if so it suggests how the banks are starting to think.
The interesting political point, regardless of the outcome of the court cases, is really this: is it acceptable that organisations that are now largely in public ownership – having been bailed out with gargantuan quantities of public money – should still be able to help themselves to up to £40 of their customers’ hard-earned cash for going a few pence overdrawn? Can the obvious lie that these charges reflect administrative costs be sustained?
And can people who have, through a combination of greed and ignorance and incompetence, led their industry to the brink of collapse, really find the sheer bloody arrogance to go on levying charges of this order on people who will increasingly struggle to make ends meet?
And will New Labour in Government do anything about it if they do?