CHALLENGE UNFAIR BANK CHARGES SAYS MP AFTER LAURA v. GOLIATH TEST CASE
The Liberal Democrat MP for the West Cornwall and Isles of Scilly
Constituency of St Ives, Andrew George, heralded news of the outcome
of a recent County Court case on behalf of one of his constituents,
Laura Saunders (of Goldsithney) which resulted in her victory against
Yorkshire Bank plc in respect of bank charges amounting to £922
during 2004. Following what could be a very significant test case, Mr
George believes that many banks should review their treatment of
low-income bank account holders and has referred the case to the
Secretary of State for the Department of Trade and Industry - Rt. Hon
Patricia Hewitt MP - who has been encouraging pensioners and
claimants to open up bank accounts to receive their benefit payments,
rather than to receive them over the Post Office counter.
The case of Laura Saunders is set out below (see notes [i]). Ms Saunders is one of millions of people who suffer at the hands of banks and credit card companies that make much of their profits from variable charges which vulnerable bank account members can do little about. A number of large high street banks have raised fees for bounced cheques and unauthorised overdrafts and have increased the amount charged for customers for unpaid cheques and standing orders.
The consumer body Which? has called on all banks to follow the lead of Alliance and Leicester and the HSBC, which now charge the same rate for unauthorised overdrafts as they do for authorised ones (A&L charges 6.9% and HSBC 14.8%). In the case of Laura Saunders, she claimed £922 in the County Court, arguing that charges levied by the bank on her were an unlawful penalty.
Commenting on the case, Mr George said, The case of Laura Saunders is typical of many constituents who have contacted me complaining about the penalties they face, often with little prior notification of the change in the rules by which their account will be managed. Quite frankly, I believe that many lending institutions get away with blue murder in their treatment of low-income account holders. I hope that this case will be a salutary lesson to them all.
I also hope that the Government will sit up and take notice. They have been trying to bribe and cajole pensioners and benefit recipients into shifting the way they receive payments; from the Post Office counter to Automated Credit Transfer in to newly opened bank accounts. Many of those who are opening these bank accounts may find themselves in the same kind of difficulty as Laura Saunders found herself and Ministers should be aware that this could place account holders in difficulty.
As far as contract law is concerned, this test case clearly demonstrates that penalty charges should not be enforceable if those charges are disproportionate. This is good news for ordinary people on low incomes. Laura took on Goliath and won, said Mr George.