The law says that where these charges are effectively
penalties, the bank cannot legally recover them from their customer.
The banks may legally recover their actual costs
which result from a breach of contract by the customer (for example going over an agreed overdraft limit) but with automatic
computer systems, these costs are likely to be very minimal.
Any charge which exceeds what the bank may reasonably
recover for its own costs is deemed a penalty. As set out above, penalty charges
are not lawful and therefore are not recoverable.
For consumers, additional protection is given by
the Unfair Terms in Consumer Contracts Regulations 1999. These regulations state
that if a contractual charge is unfair to a consumer then it is not legal.
Although the law does support claims against the bank by
its customers, very few cases have actually come to court. This is because generally
the banks are settling these claims when they are put under pressure.
