Lib Dems pledge automatic bank charges payback motion

11.23.26pm BST (GMT +0100) Thu 27th Aug 2009

Lib Dem leader Nick Clegg has pledged legislation to ensure that everyone who has suffered an unfair bank charge will get their money back without having to ask.

This radical move is the first time that politicians have got directly involved in the campaign to reclaim unfair bank charges. It's an unprecedented step, potentially meaning a guaranteed payout to millions of people, totalling over five billion pounds.

Nick Clegg, and his Shadow Chancellor Vince Cable, have promised to table a Parliamentary motion after the summer recess. That motion will require banks and building societies to automatically compensate victims of unfair charges - if and when "scandalous" fees are adjudged unfair.

A landmark test case on fees is currently at the House of Lords, with a decision expected in the Autumn. The test case will decide whether fairness rules apply to the charges of up to £35 a time for going beyond your overdraft limit. The banks, arguing fairness rules do not apply, have already lost in the High Court and in the Court of Appeal.

Peter Wilcock, Liberal Democrat Parliamentary Spokesman for Saffron Walden Constituency said, "Finally, one party has had the guts to take a stand on this issue."

The Liberal Democrats have taken a strong line on unfair charges for a long time. In our manifesto for complete reform of Britain's banking and financial institutions "A New Deal for the City", launched in May 2008, we stated:

"The treatment of charges by the banks borders on the scandalous. It is a continuation of the practice described above: a protected industry seeking to maximise profits by exploiting the weakness of individual consumers who lack information and sophisticated knowledge of products or legal advice. The principle should be established that bank charges must be transparent and cost-based."