RSS FeedHigh Court Ruling Says Business As Usual
07/05/2008
A seminal ruling which enables the Office of Fair Trading to assess unfair bank charges on customers does not apply to business bank account holders, a High Court judge has declared.
Justice Andrew Smith ruled in favour of the banks where businesses were concerned, stating that he accepted the banks' argument regarding business account overdraft charges: that they are not penalties and can therefore be enforced.
This is because business accounts are governed by common law, as opposed to the consumer law which regulates individuals' accounts. Nevertheless, business account holders can face levies of up to £39 every time they advance into 'unauthorised overdraft' territory, losses which can soon mount up for small businesses.
Mark Gander, bank charges expert from the Consumer Action Group, said in the Mail on Sunday: "'This ruling means businesses are completely ruled out of the bank charges battle at the moment".
He continued: "Banks assume that business customers can field these charges but they are just as vulnerable as ordinary people. We're not talking about multi-nationals here."
However, it was not clear whether the judge was referring only to present terms and conditions, or historic ones as well. This means that the judge has to some extent at least left things 'up in the air'.
Justice Andrew Smith ruled in favour of the banks where businesses were concerned, stating that he accepted the banks' argument regarding business account overdraft charges: that they are not penalties and can therefore be enforced.
This is because business accounts are governed by common law, as opposed to the consumer law which regulates individuals' accounts. Nevertheless, business account holders can face levies of up to £39 every time they advance into 'unauthorised overdraft' territory, losses which can soon mount up for small businesses.
Mark Gander, bank charges expert from the Consumer Action Group, said in the Mail on Sunday: "'This ruling means businesses are completely ruled out of the bank charges battle at the moment".
He continued: "Banks assume that business customers can field these charges but they are just as vulnerable as ordinary people. We're not talking about multi-nationals here."
However, it was not clear whether the judge was referring only to present terms and conditions, or historic ones as well. This means that the judge has to some extent at least left things 'up in the air'.