Bank charge ruling expected on Wednesday

News that the decision by the Supreme Court will rule on whether or not the charges made by banks for unauthorised overdrafts are unfair is expected to be heard on Wednesday 25th November.

In recent years unauthorised overdraft charges have been particularly damaging to small businesses as many owners run their companies using personal accounts and overdraft facilities. The general consensus has been that the Court will find against the banks, however, no word regarding compensations has yet been heard.

Despite this, it appears that the case could be drawn out further as the Office of Fair Trading (OFT) will still have to determine what is deemed a fair charge for unauthorised overdraft use.

Although it is unclear whether or not the banks will pursue this case further should the Supreme Court rule against them, Santander have recently launched a bank account with no overdraft fees. This suggests that they are expecting to lose the case despite denying that this is the reason for launching the new account. However, Santander has said that customers found to be going overdrawn will be charged 12.9% interest.

According to the consumer group Which, it is believed that bank charge claims will soar as a result of the expected Supreme Court’s decision. Therefore people making claims are being advised to do so as quickly as possible so that they can get to the front of the queue for any impending payouts.

Given the current economic climate, banks are still unwilling or hesitant to lend money to many small businesses. Consequently small business owners are under increasing amounts of pressure to obtain more money to help their business to grow. Therefore reimbursement of charges as result of going overdrawn would come as a welcome relief to small business owners everywhere.