Banks lose appeal over scrutiny of charges

By Peter Griffiths

LONDON (Reuters) - Banks lost an appeal on Thursday against a decision to allow the consumer watchdog to scrutinise current or checking account charges, in a ruling that could lead to customers reclaiming millions of pounds of fees.

Judges at the Appeal Court in London upheld last April's High Court ruling that the Office of Fair Trading has the power to assess the fairness of banks' charges, the OFT said.

"We are now analysing the implications of the judgment," the OFT said in a statement. "The OFT has already written to the banks with its provisional view on the fairness of the terms, setting out its concerns that they may be unfair."

The watchdog launched an investigation into the fees in 2007 after one of the biggest consumer campaigns in recent years, in which hundreds of thousands of people tried to claw back fees.

Campaigners said it was unfair to charge people up to 35 pounds if they have an unauthorised overdraft or write a cheque without enough money in their account to cover it.

"All gates to victory have now been unbarred. There is now just a tiny latch left to be unlocked," said consumer finance journalist Martin Lewis, who has campaigned on the issue.

The OFT has said banks' charges are not clear and a significant number of people underestimate how much they are expected to pay and how often fees are levied.

The watchdog has also raised concerns over the size of charges for services such as unauthorised overdrafts and how the fees make up a high proportion of the banks' total revenues.