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A Lloyds TSB customer has lost his case against the bank for unfair overdraft penalty charges.
The customer, Mr Berwick, had argued that charges of £2,545, imposed for an unauthorised overdraft, amounted to illegal contractual penalties. However, the judge at Birmingham County Court said that the charges were legitimate fees for the service provided, and were therefore legal. Mr Berwick has been given leave to appeal and is considering his position.
As the first judgement in this type of claim, the outcome could be seen as a set back to hundreds of thousands of bank customers who are claiming they have been overcharged.
Until now many customers have been successful in their claims as the banks have reached out of court settlements in their favour. This has avoided any legal decisions against the banks. Although this judgement is not from the High Court, and is therefore not binding on any other case, as the first of its kind the decision in favour of the bank may be significant for other similar cases.
The Consumer Action Group, which is running a prominent campaign against bank charges, has said the decision is disappointing. In their view describing the charges as fees for a service is just a way of disguising the charge and avoiding established laws.
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