The majority of UK Consumers are pleased the banks won a suprise court victory in their battle against unauthorised overdraft charges.

The Supreme Court ruled last week that the charges are not subject to regulation of the Office Of Fair Trading under unfair contract rules. This ruling means that millions of people who have paid the charges are entitled to refunds, but, conversely, the banks victory in court also means that the threat against free banking has also been lifted.

Industry experts had warned that if the banks lost the lucrative income stream from the charges, they would have to look for other ways to recoup it, such as imposing a flat monthly fee on every bank account, or by charging a per transaction fee.

A recent survey of 3,500 people carried out by moneysupermarket.com after the court decision discovered that 51% of people thought that the charging system was fair, saying they objected to subsidising people who could not manage their money who are responsible for all unauthorised overdrafts and bridging loans.

A further 5% stated that someone had to pay for the free banking service.

However, another 20% of respondants said that the current system was unfair, charges were too high, and penalised the poorest households most, while 24% thought people were being ripped off by the banks.

UK customers who go into unauthorised overdrafts or breach their agreed limit can be charged as much as £35 or more for a single returned payment. The bank charge refund campaigners claim the actual cost to the banks is less than £2.50.

The charges generate around £2.6bn for UK banks, and these charges are used to subsudise free banking for other customers.

The advice for debtors issued by the consumer magazine “Which” advises people in financial hardship to talk to their banks. Refunds are unlikely, but the banks have to take your circumstances into account and may waive future charges. If your bank refuses to help, go to the Financial Ombudsman.

Tags: Bank, charges, court, debt, financial, hardship, refunds, supreme, uk