Five Law Lords are currently considering an appeal by the UK's main banks against an earlier decision this year by the Appeal Court that went in favour of the Office of Fair Trading, (OFT).

In an earlier hearing the Appeal Court upheld a ruling from last year that the OFT had the power to decide if bank charges were fair or not.

The banks have argued all along that their charges are fair, reasonable and legal.

The outcome of the appeal will be known later this year.

It is estimated that the banks receive around £2.5bn each year from overdraft charges when someone goes overdrawn without permission or if they have a cheque or direct payment returned unpaid.

If the banks win

If the banks win then that is virtually the end of the OFT’s case, all those campaigners and around one million individuals claiming back bank charges will be bitterly disappointed.

If the OFT win

If the OFT win then it will be the end of the first part of what is basically a two-part test case, with this victory settling the issue of whether the OFT can assess if bank charges were fair or not.  

The second part of the case will be what the OFT regard as a fair level of overdraft charges, if any. The banks’ could then challenge what the OFT recommends as a fair charge, they may decide that there should be none or very little. Whatever the OFT comes up with this may invariably lead to more rumblings in the Court. A win for the OFT could also bring about the end of free banking.

How long can I go back with my claim?

This is not clear as most experts say six years in the UK but others argue that your claim could go back as far as July 2001 which is when Financial Service Authority (FSA) issued a waiver on all Court claims.  

The standard rule is you can claim back six years, yet the FSA said the clock stopped when the hold on reclaiming started in July 2007, and this is six years before that. Although this is a ruling from the FSA it does not have backing from the Courts. So it may be worthwhile claiming back as far as July 2001 and see what happens.

This applies whether you’re in England and Wales, in Scotland it is five years but it is worth considering going for six as well because if you’re not going to use the courts, but the Ombudsman, where there’s no time limit.

Does this affect credit card charges?

No, this is completely different.

If you have already paid credit card charges then you are likely to have a claim for compensation going back as far as six years in the UK, five years and a maximun £750 if you reside in Scotland and £2,000 if you reside in Northern Ireland.

We have questions and answers plus template letters here

Our much acclaimed 'Reclaiming Credit Card Charges Tool' helps you add up your charges and creates a personalized letter to print out and send to your credit card issuer.

Vist our 'Credit Card Charges Tool' here