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Immediate release on 
Thursday, 5 April 2006 at 2pm


Banks must refund unfair default charges in light of OFT ruling

Govan Law Centre is calling on all UK banks to voluntarily refund default charges applied to customers in excess of £12 per transaction (or day) over the last 5 years.  A typical refund* could between £2,000 and £4,000 for thousands of customers in Scotland. 

We believe that in light of the OFT’s ruling today customers in Scotland have a clear right to seek an overcharging refund over the last 5 years (in terms of the Prescription and Limitation (Scotland) Act 1973).  Govan Law Centre will launch a number of court actions to test this proposition unless the banks agree to a voluntary refund.

The Office of Fair Trading (OFT) announced today (5 April 2006) that banks or credit card charges of more than £12 must be presumed to be legally unfair.   That does not mean charges of less than £12 are fair, but rather that unless banks and the credit industry reduces it charges to below £12 the OFT will take legal action against creditors.

Govan Law Centre has been actively campaigning against unfair bank charges through its free self-help website – www.bankcharges.info since March 2005.   Many customers across the UK who have used our website have obtained full or partial refunds.  The OFT statement today makes it clear that UK banks have been seriously overcharging.

Govan Law Centre’s Principal Solicitor, Mike Dailly, said:

“In light of the OFT’s announcement today we believe that UK banks are now legally obliged to refund all customers for overcharging.  Customers can go back five years in law.  One in five customers in Scotland is hit with bank charges, so we are talking about half a million people in Scotland.   That would equate to overcharging in Scotland alone of more than £1 billion pounds”.

*  Typical refund: A customer with 7 to 15 bank charges over one year will likely incur charges of £39 plus an additional monthly charge of £28.  That represents a total cost per annum of between £469 and £921.   Assuming charges of no more than £12 were fair, the overcharging here would be between £385 and £777 per annum.   That represents a total overcharging of between £1,925 and £3885 over a five year period.




The OFT announcement is available here: http://www.oft.gov.uk/News/Press+releases/2006/68-06.htm