Debt Management and IVA providers are eagerly awaiting a decision by the House of Lords concerning the fairness of bank charges, and overdraft fees, since it could have considerable implications for over-indebted consumers. The House of Lords will decide this week weather or not to uphold an appeal by the banks concerning overdraft fees. If the Lords rule against the banks, this could mean that millions of customers will be entitled to a refund of the unfair bank charges that have been levied, as well as a complete rethink of bank chargers going forward.

A lot of debt management clients could benefit from a positive decision by the House of Lords, since in many cases a large part of their debt is made up of bank charges and overdraft fees. If these charges were to be wiped out, then it could reduce the duration of their programmes by helping them to get out of debt more quickly.

The appeal, by the main banks, will be heard by 5 Law Lords, as the banks attempt to challenge a decision made by the Appeal Court earlier this year. That previous ruling did not go the banks way, as it upheld a decision from 2008 that said that the OFT, Office of Fair trading, could decide if bank fees and charges were reasonable or not. Around 1 million consumers are also awaiting the decision, hopeful that they can reclaim their bank charges.

Amongst them are some of the most hard up cases, where overspending on credit card debt, store cards and loans has landed them in a serious financial mess. Some of these individuals see that the possibility of a refund could really make a difference by reducing the size of their overall financial liability, and could help put an end to their debt problems.

There are currently several hundred thousand consumers that are signed onto formal debt solutions, such as IVA’s, and anything that can help to bring down the size of their debt can only help. The banks, on the other hand, are not so keen to have to refund the money, since the extent of their commitment is around £2.5 billion per year. The hearing, in the house of Lords is to take place nearly 2 years after the OFT and the banks agreed to resolve the matter through the courts, so one way or another, the decision is now long overdue.