Bank charges are not legally enforceable. Penalty clauses in contracts in English (and Scottish) law for breach of contract aren’t legal if the penalty exceeds the actual cost of the breach of either party.
We all know that it does not cost a bank £25 to £39 to return a Direct Debit, Standing Order or cheque, and luckily so do judges, and indeed the banks. It’s purely a money making scheme, and a lucrative one at that – with estimates that the charges from the top 4 UK high street banks generated £3 billion alone. One in five bank customers incur these types of charges, and because it's a bank imposing them, most assume that the bank must be legally entitled to do so.
OK so what are the rules?
Under the 1977 Unfair Terms (contracts) Act, the sheer fact that ALL banks make these charges makes this a breach of the act (the example given is exactly that!).
This is also a breach of the 1999 Consumer Credit Act (Unfair Terms in Consumer Contracts - the OFT is already investigating the charges levied by Credit Card Companies) and possibly the Sale of Goods Act, and many others.
