In the United
Kingdom, banks are being deluged by
thousands of court actions a month as a consumer campaign against unfair penalty
charges gains momentum. Stand by for the Labor Party in Australia to seize
upon this issue by calling for stronger regulations to allow similar action
here.

According to a report
in The Scotsman, campaigners in the UK have called on customers to take banks to the small claims
courts to get a refund of “unjust” charges – most of which are not legally
enforceable, even if they are listed in the terms and conditions of an account
or loan. Banks have already paid out tens of thousands of pounds to angry
customers rather than risk losing a court case – a move which could set a legal
precedent and cost the banking industry millions.

The basis for the actions is an
April ruling by Britain’s Office of Fair Trading (OFT) that any fee above £12 is
unfair and unlawful, because it breaches the Unfair Terms in Consumer Contracts
Regulations 1999. These say consumers must not be charged “a disproportionately
high sum”.

The Scotsman reported that banks,
loans companies and credit card firms together make more than £1.3 billion a
year by charging penalty fees of up to £39 for unauthorised overdrafts, bounced
direct debits and missed payments.

Peter Fray

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