The Conservative Party has confirmed it agrees with the principle of automatic payback of all unfair bank charges, provided it's a full and final settlement for all.

Last month, responding to our open later on bank charges, the Tory leader agreed payback should be "swift and fair" (see Cameron agrees to payback of charges MSE News story), assuming charges are ruled unfair.

Earlier this week, as an arranged follow up, I held a phone meeting with the Conservative shadow financial secretary, Mark Hoban, to discuss the more radical concept of 'automatic payback' – people getting their money back without asking.

Why automatic payback is so important

If bank charges are legally ruled unfair, the fact a bank is the only company that can take our money without asking or needing to go to court is especially divisive.

As this money is taken from people's bank accounts without asking, financial justice demands it should be repaid without people needing to ask.

This isn't just for the sake of it. Without an automated system, it'll only be the literate and web savvy who get their money back. That'll leave some of society's most needy – those with mental health issues, financial phobias, literacy issues – as the ones distanced from justice.

My thoughts on Mark Hoban's view

I was initially taken by surprise. Most politicians need the bank charges situation explained to them, so it was refreshing to chat to one who was well briefed and knew all the ins and outs.

After the necessary caveat that the conversation assumes the new Supreme Court follows the lower courts' decision that fairness rules do apply (see Bank Charges guide), and the OFT agrees bank charges actually are unfair, we got to the nub of it.

Little persuasion was needed towards automatic payback, it's an argument that they've been through and he mentioned he's already engaged in a radio debate where he faced the 'won't people who behave well simply be paying for those who've gone beyond their limits?' arguments.

He said the Tories don't want to see masses needing to traipse through the courts or even the Financial Ombudsman system.

When I suggested banks should be made to write to all customers notifying them of their prior charges and that they would get payback, no objection was voiced.

The Tories' worry

The real worry the Conservatives have is how to ensure any system of payback is a quick, efficient solution that provides financial certainty and closure.

What they don't want to see is, for a solution to be agreed or negotiated, which banks and many consumers follow, only for others who are more militant to challenge the agreement through the courts.

There are two obvious groups that might launch such a challenge: the first are campaign sites like this one, and the other are claims handling companies which promise to get people more money back – though, of course, the 25% cut they get would probably defeats any gain for individuals.

Ensuring any settlement is legally watertight won't be easy; the FSA can provide a regulatory solution but it cannot rule the courts. That may need legislation.

And that's where we left it. The Tories are planning to investigate the legal impact of a solution, and how it could work.

Political views converging

Since Nick Clegg raised his head above the parapet to become the first political leader to take a stance on this, we've actually seen a convergence of view points (see Nick Clegg backs bank charges automatic payback MSE News story).

Gordon Brown this week wrote about his wish for a negotiated settlement (see the PM on bank charges MSE News story), a route the Conservatives seem to be backing to.

There can be little doubt the bank charges debate is now entering a political phase – with an issue as large and complex as this, that is inevitable.

To see who will actually be the key player remains a question of timing. With an election likely next May it's crucial to follow what all parties think.

Further Info / Related Links

Full reclaiming guide: Bank Charges
Are you in hardship? Bank Charges Hardship Reclaiming
Related MSE News: David Cameron’s pledges bank charges payback
Related MSE News: Nick Clegg pledges automatic payback