Money Matters

So there we have it: the Supreme Court has this morning ruled that bank charges for unauthorised overdrafts cannot be investigated by the Office of Fair Trading – effectively closing the door on millions of pounds worth of compensation claims from 1.2 million account holders.

But not because these overdraft charges have been deemed “fair” by the court, simply because, in this case, the legal concept of “fairness” cannot relate to “the adequacy of the price or remuneration, as against the goods or services supplied in exchange”. Or, in other words, “value for money” is not part of the equation.

What does this actually mean? The banks (and the lawyers) are clearly the winners for now. But who are the losers? According to consumer group Which?, “The bank charges ruling marks black day for consumers – this is a bitter blow for the millions of people who have been patiently waiting to get their bank charges back.” It does, however, beg the question: who are these patient long-suffering people? People who borrowed money they didn’t have, without asking permission – and who then tried to claim compensation for being charged!

I can’t help but agree with Justin Modray, the independent financial adviser who now runs www.candidmoney.com: “Today’s Supreme Court ruling in favour of the banks is a blow for consumers, but might at least help discourage irresponsible borrowing”.

More importantly, the other winners are the responsible customers who remain in credit. If the banks had lost, we might all have suffered if free-in-credit banking was withdrawn.

It’s only a black day for those in the red.

For full coverage of this story on ft.com, see Supreme Court backs banks on charges.

If you’re a bank customer who was waiting for compensation, post your comment on today’s ruling below.