Bank charges reclaiming has largely fallen off the radar after the banks' 2009 Supreme Court victory. But Mike Dailly (right), principal solicitor at Govan Law Centre, thinks the fight is still on.
Overdraft charges are fair and beyond challenge, according to the banks.
Of course, history is written by the victor, and when the Office of Fair Trading lost its test case against the banks in November 2009, UK consumers were wrong-footed.
The momentum in our campaign for fairness and transparency was lost even though the Supreme Court said overdraft charges could still be challenged under a different rule, the Unfair Terms in Consumer Contract Regulations (UTCCR).
This aims to ensure contract terms are indeed fair. So where are we now on unfair bank charges?
Little has changed. The banks still extract over £2 billion each year from vulnerable consumers in overdraft charges.
Some banks have introduced daily fees for going overdrawn without permission, but for many consumers in financial difficulty this makes little or no difference.
Our legal team identified powerful arguments to challenge overdraft charges using different powers under the Consumer Credit Act (CCA).
Govan Law Centre will be debating these in court in August, but in truth these provisions are highly technical and what we really need is a simple, no nonsense solution.
Last month's High Court defeat of banks on mis-selling payment protection insurance (PPI) may present the catalyst for change that consumers having been waiting for.
This case clarified the precise status of the Financial Services Authority's (FSA) rules. So what does this mean in practice?
Two of the FSA rules which came into force in November 2009, under banking regulations, are potentially powerful.
One requires the bank's service to an individual customer to be 'fair', and the other requires 'appropriate information' about the service to be provided.
The strength of these rules is they are general principles – unlike the rigid UTCCR or CCA – so there is less scope for expensive lawyers to argue how many angels can dance on the head of a pin.
What is 'fair'?
If we consider 'fairness', banks have practically admitted in the bank charges case that a single overdraft charge is not fair to an individual customer.
That is because the price does not reflect the cost to them of the unauthorised overdraft transaction.
Instead, it helps subsidise customers who are always in credit and therefore pay no fees. And the customer who has to pay is often skint.
All of this means we can once again talk about the price of overdraft charges, and whether the cost is fair and proportionate to the consumer.
The Supreme Court said you couldn't do this with the UTCCR, but you can with the FSA rules. That is a radical and exciting proposition.
Banks change their story
On the subject of 'appropriate information', we must not forget the banks' complete lack of transparency.
In 2005, they told the House of Commons Treasury Committee bank charges were "going to pay for all the people we have who pursue debt, collect debt, speak to customers and chase payments". That wasn't true.
Nor was it true when the British Bankers Association told us in 2006 that every time a transaction was declined there was a bank employee sitting in an office looking through a customer's file and deciding what to do.
In 2007, the banks then claimed overdraft charges were a fee for an informal overdraft.
The truth only came out in the OFT's case, and most banks have still failed to communicate this. They admitted the charges are indeed used to subsidise other customers.
The fight for a fair and transparent bank charging structure is far from over. I believe hope is on the horizon. Watch this space.
Views expressed are not necessarily those of MoneySavingExpert.com.