Leeds Mercantile Court was scheduled to hear more than 200 cases yesterday as customers demanded their bank charges back over questions whether the charges were legal or not. Instead of doing to court, the banks backed down and paid the money out instead.

Judge Simon Grenfell had planned to use some of the claims as test cases that could be referred to if more actions were bought however it seems the banks decided to pay out instead of allowing him to set a precedent.

The banks’ change of heart will give hope to many who are looking to reclaim their charges. Before yesterday’s U-Turn, it was believed that the banks were in a strong position – in May, Lloyds TSB won their case in court after being sued by a customer over supposed unfair overdraft penalties. A District Judge at Birmingham County Court rules that the charges were in fact fair and the decision was later cited by a judge in Hull. Many were disheartened by the result, believing that the banks had the upper hand.

Approximately 250 customers were originally scheduled to appear at Leeds rtou for a case management hearing over their claims. The majority of these settled overnight leaving just 75 people set to appear in court. Out of these, 24 actually turned up or sent a representative and Judge Grenfell said he was hopeful that one or two would go to trial.

Judge Grenfell told the customers and the bank representatives that dealing with each one, case by case, would be cumbersome however group litigation would be expensive. Instead, he would look to pick a few cases that would probably end up with the case in court which would then produce an authoritative ruling. The verdict will not be binding on all other cases however it would remain a persuasive factor. As the afternoon wore on, it emerged that the majority of claimants had settled with the banks. Judge Grenfell then found himself without and suitable cases.

The bank charges issue really came to the public’s attention last April when the Office of Fair Trading indicated that high penalty charges were likely to be illegal. This prompted thousands of people to comb their statements, totting up the ‘illegal’ charges. Banks have fought back and tried many delaying tactics to prevent customers from claiming – some have also refused to provide statements, or have dragged the complaints out for as long as they can. Some have even shut down bank accounts of those trying to claim – a move which was condemned by the Financial Ombudsman Service.

If you have yet to claim back your bank charges, we have a guide here, as well as a template letter you can use to send to the bank.

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