Bank charges: latest developments

The Scottish Legal Aid Board was reported on 10 December 2010 to have refused to fund a test case on the enforceability of bank charges for unauthorised overdrafts under the Consumer Credit Act 1974, sections 140A-140D.

The case is brought by Jennifer Sharp who seeks to reclaim charges amounting to £750.  The Board's ground of refusal is based on a cost-benefit analysis: the expenses of the action far outweigh the amount which she is claiming.  There was insufficient evidence that the case would affect large numbers of other people.  Following the decision last summer noted previously here, the bank charges cases are having to be brought under ordinary rather than small claims procedure, where the individual's liability for the expenses of the action is heavily restricted.

Ms Sharp is being advised by Mike Dailly of the Govan Law Centre, who says that he is considering a Court of Session review of the Board's decision.  The Board has however indicated that its decision may be reconsidered if evidence of the potential impact of the case is forthcoming.  Some differences of view about what has been going on are apparent from the respective organisations' websites.

Earlier, in October 2010, the UK Government had indicated (see further here) that, after considering the responses to a call for evidence on the matter, it would not be pressing for reform of the Unfair Contract Terms Directive in order effectively to reverse the Supreme Court bank charges decision, OFT v Abbey National [2010] 1 AC 696 (in which the court held that in its present form the Directive could not be used to review the fairness of the charges).