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Overdraft charges update
Last updated 25 November 2009
Summary
On 25 November 2009 the Supreme Court ruled that the level of unarranged overdraft charges in personal current accounts cannot be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR). The Court decided that current account customers receive a package of services and unarranged overdraft charges are part of the price paid by customers in exchange for that package.
The judgment focused on the banks' current terms but the banks and the OFT agreed that the judgment should apply also to historic terms.
Earlier hearings established that with one exception none of RBS Group's terms was capable of constituting a penalty clause. One historic NatWest term was found to be a contractual prohibition, but no ruling has been made that this term is in fact a penalty. The Supreme Court has now decided that such charges are in fact the price for services.
In our view, the judgment of the Supreme Court means that the level of NatWest's unarranged overdraft charges cannot be challenged under the common law penalty doctrine. We do not believe that there is any other legal basis on which the level of these charges can be validly challenged.
The Supreme Court verdict is available via www.supremecourt.gov.uk
On 22 December 2009 the Office of Fair Trading ("OFT") announced that it was ending its investigation into the fairness of overdraft charges under the UTCCR.
Customer complaints relating to unarranged overdraft charges were put on hold during the test case. Now the test case is complete, NatWest has written to all affected customers responding to their complaint.
- What will happen to new customer complaints related to unarranged overdraft charges?
Any new complaints will be handled in line with the Bank's normal complaint handling procedures. We will aim to provide a response to the complaint within 8 weeks of receipt. - I am in financial difficulty - what can I do?
If you have financial problems, come and talk to us, and we will try to help you solve them. Depending on your circumstances, we could set regular or fixed repayments for debts, or we could reduce or suspend your repayments for a certain period.
If you have a more serious debt problem, we will work with you and put you in touch with organisations that offer help and advice to sort out your repayments and overcome your difficulties.
If you feel you need independent financial advice, we will be happy to direct you to someone, or to work with your chosen adviser.
The sooner you come to us, the more likely it is that we will be able to help. - Where can I find out more?
We will update this page with any developments in the proceedings.
Alternatively you can find out more at the following websites:
