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29 January 2009
Issue: 7354 / Categories: Legal News , Banking
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Legal comfort for banks

Retail banks successful in unarranged overdraft charges test case

The High Court has ruled in favour of banks in an Office of Fair Trading test case against unarranged overdraft charges.

The ruling, OFT v Abbey National & Ors [2009] EWHC 36 (COMM) concerns the terms relating to overdraft facilities of certain historic current accounts of Lloyds TSB, RBS and Abbey National PLC. Mr Justice Andrew Smith held the historic terms applying to accounts at Lloyds TSB and three out of four at RBS Group were not capable of amounting to penalties at common law.

The OFT launched its test case against the banks in July 2007. The case, on whether the fairness rules of the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) apply to unarranged overdraft charges and whether these amount to penalties at common law, is part of the OFT’s wider investigation into the fairness of unarranged overdraft charges.

Peter Clough, head of disputes at Osborne Clarke, says: “This ruling will offer some comfort for the retail banks. Given the turmoil in

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Witness evidence can be compromised by AI before a solicitor sees the draft, leaving safeguards focused on authorship incomplete
Possession claims are entering a new digital era, with procedural traps awaiting practitioners who assume familiar rules still govern every step
The Environment Agency can prosecute offences beyond environmental legislation where proceedings support its statutory functions, the Divisional Court has confirmed
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