Bank Charges Case Dropped By Consumer Watchdog

(Guardian) – THE OFFICE FOR FAIR TRADING has abandoned its legal fight against Britain’s banking sector over unauthorised overdraft charges, after losing its landmark test case at the supreme court last month.

The watchdog admitted this morning there was only a “limited” chance a second case would succeed. It insisted, though, it is still committed to reforming the personal current account market.

“The supreme court judgment was not the outcome we had hoped for and was disappointing for many bank customers,” said the OFT chief executive, John Singleton.

“Having now considered in detail all the options available to us in light of the judgment, we have decided not to continue what would be a narrow investigation with limited prospects of success.”

The decision is a blow to more than a million bank customers who had hoped to reclaim charges – up to £38 a time in some cases – levied by their bank when they went overdrawn without permission.

Four weeks ago, the supreme court ruled that overdraft charges were not unfair, under clause 6 of the Unfair Terms for Consumer Credit Regulations. Experts have suggested the OFT should have brought its case under another part of regulations, but the OFT has now concluded this would probably also fail.

It now intends to talk with banks and consumer groups to find ways of improving the market. This could include new legislation, it hinted.

“Despite some recent and planned improvements by banks, particularly around transparency and customer switching, the OFT believes fundamental changes are still required for the market to work in the best interests of bank customers,” the OFT said.

“Banks earn around a third of their personal current account revenues from unarranged overdraft charges that are difficult to understand, not transparent and not subject to effective consumer control.”

Consumers who still hope to win back bank charges have been warned against using the services of claim management firms who offer to handle cases in return for a share of any funds recovered.

Advertisements

One Response

  1. The failure of the OFT to protect the banks’ customers is a national scandal.

    http://peterreynolds.wordpress.com/2009/12/24/oft-incompetence-conspiracy-paper-tiger-or-all-three/

Comments are closed.

%d bloggers like this: