Unsure what to search for? Other customers found these helpful.

Current account preliminary test case


Update on overdraft charges

On 25 November 2009, the Supreme Court ruled in favour of the Banks, holding that their unauthorised overdraft charges are not capable of being assessed for fairness on the grounds contended for by the OFT and County Court litigants.

The case

The ruling
The Supreme Court has held, as the Banks have always contended, that their unauthorised overdraft charges are not capable of being assessed for fairness under the UTCCR on the grounds that they are too high. Barclays welcomes the ruling and the clarification confirming its belief that its overdraft charges are legal.

The pending customer claims and complaints seeking the recovery of unauthorised overdraft charges should now be dealt with in light of these decisions. The Financial Services Authority (FSA) waiver for dealing with customer complaints on unauthorised overdraft charges lapsed with the handing down of the Supreme Court ruling on 25 November 2009.  Barclays, in line with the other Banks will be discussing with the FSA and others how best to address the pending claims and complaints in light of this important Supreme Court ruling.

FSA complaints handling waiver
At the start of the test case the FSA put customer complaints relating to unauthorised overdraft charges on hold.  This meant that if a customer lodged a refund claim with Barclays during the test case, we would acknowledge the claim but hold them until the outcome of the test case.  The FSA waiver lapsed on 25 November 2009 given the resolution of the test case. Now that this part of the test case has been resolved in favour of Barclays and the other Banks, Barclays will seek to work with the FSA how best to address these complaints.

Personal Reserve
On 18 August 2008 we introduced our Personal Reserve service. The charges under our Personal Reserve service are not unauthorised overdraft charges and therefore the FSA waiver does not apply to complaints about Personal Reserve.   This means we will deal with complaints about our Personal Reserve service in line with our complaints handling procedures. However, we agreed one exception to this, following consultation with the FSA, when we decided that if your complaint related to the level, fairness or legality of the charges under the Personal Reserve service we would review the impact of the Supreme Court judgment on such charges before responding to these complaints.  Now that we have been able to do so, we are clear that complaints about the level, fairness and or legality of our Personal Reserve charges have no proper legal basis and can now be dealt with.

Barclays participated in a test case concerning the legality of unauthorised overdraft charges along with six other banks and a building society (the Banks) and the Office of Fair Trading (OFT). At the end of 2008, the Banks appealed against the High Court's initial ruling (dated 24 April 2008) that their unauthorised overdraft charges can be examined by the OFT to determine whether they are capable of being assessed for fairness under the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs).  (That ruling also held that the Banks’ charges are not capable of amounting to penalties and there has been no appeal from that decision). On 26 February 2009 the Court of Appeal rejected the UTCCR appeal and upheld the High Court’s previous decision.  Accordingly, the Banks appealed to the House of Lords (the country's highest court) as they continued to believe that their charges should not be assessed for fairness under the UTCCR.  The House of Lords hearing took place in late June 2009 and judgment was handed down by the Supreme Court (the successor court to the House of Lords) on 25 November 2009.

Note: Personal Reserve was withdrawn on 16 June 2014 and replaced by Emergency Borrowing. However, the effect of the test case is unchanged and will apply to Emergency Borrowing in the same way as for Personal Reserve.