The fight for customers to be able to use the courts to get refunds for alleged unfair bank charges took a further twist this week when the Scottish Legal Aid Board (Slab) refused to fund a major test case being brought by Jennifer Sharp against the Royal Bank of Scotland (RBS).

In June this year I reported that Ms Sharp had won the right at the Glasgow Sherriff court to revive her case about unfair and excessive charges against the Bank of Scotland.

Ms Sharp was allowed to argue that under a 2006 amendment to the Consumer Credit Act, there had been an unfair relationship between her and her bank, which was illegal because it was unfair to have been charged £750 for running up an unauthorised overdraft as the charges had been used not only to deal with her, but also to subsidise the cost of the bank's free current account service to those of its customers who stayed in the black.

This argument was not available to the OFT because it is open only to individuals and not a regulator such as the OFT.

Ms Sharp’s bid was believed to be the last chance of many more people across the UK winning back what they considered to be unfair charges.
However, Slab has now said it would not finance the case, because the costs could outweigh the compensation she could potentially gain personally.

Mike Dailly, of the Govan Law Centre, a non profit making organisation which is supporting Ms Sharp bring the case, said Slab’s decision would now make it impossible for customers to sue banks over charges but he believed that the Board had acted unlawfully, unreasonably and irrationally.

He has written to the board to complain who have said that they would reinvestigate the application for legal aid, especially after Govan Law Centre said it would cap its fees.