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OFT drops the test case on bank charges
Page last updated Tuesday, 22 December 2009
Following the Supreme Court's judgment last month, the OFT has today announced its next steps in securing changes to unarranged overdraft charges and the wider personal current account market.
The Supreme Court found that unarranged overdraft charging terms in the contracts considered are not assessable in full under the Unfair Terms in Consumer Contract Regulations 1999 ('UTCCRs').
After detailed consideration of the judgment and of the various options available to it, the OFT has concluded that any investigation it were to continue into the fairness of current unarranged overdraft charging terms under the UTCCRs would have a very limited scope and low prospects of success. Given this, it has decided against taking forward such an investigation.
The OFT nevertheless continues to have significant concerns about the operation of the market for personal current accounts. Despite some recent and planned improvements by banks, particularly around transparency and customer switching, it believes fundamental changes are still required for the market to work in the best interests of bank customers. 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.
A number of options are available to secure the changes that the OFT wants to see, ranging from voluntary action to legislative change. The OFT will now discuss these issues intensively with banks, consumer groups and other organisations, with the aim of reporting on progress by the end of March 2010.
The OFT's decision not to continue its investigation into banks' unarranged overdraft charging terms under the UTCCRs as a result of the Supreme Court judgment followed extensive consideration of the issues including discussions with consumer groups, campaigners, banks, the Government, the Financial Services Authority and Financial Ombudsman Service.
Consumers with complaints about bank charges should look at advice available from the FSA and FOS on their websites.
John Fingleton, OFT Chief Executive, said:
'The Supreme Court judgment was not the outcome we had hoped for and was disappointing for many bank customers.
'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.
'But we remain deeply concerned that the market for personal current accounts is not working well for consumers and does not give banks sufficient incentives to compete.
'We are committed to securing significant changes to unarranged overdraft charges going forward, whether through voluntary agreement with the banks or by other means. Customers can play their part by looking for value for money and switching accounts if necessary.'
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Andy Leominster (Guest) Sunday, 28 February 2010
There must be another way to go here, I have over £9000 in charges with lloyds tsb and now they are threatening to take me to court. As far as I'm concerned these charges cannot & will not be ever justified. I will keep a close eye on the test case in Europe
PV (Guest) Sunday, 14 February 2010
Perhaps the only way is to go to the European Union courts!
David Birmingham (Guest) Monday, 08 February 2010
The only reson the High court have ruled in favour of the Banks is because of the current economic crisis. the government bailed out the banks with our money, and the courts have had to help out the banks in screwing us all out of UNFAIR CHARGES! Thanks Gordon Brown. you wont be getting my vote!
Dele Akodu (Guest) Thursday, 07 January 2010
I received my December Bank Statement from Abey now known as Santander, to find that I had been charged £70.00 for going overdrawn by 32p. Please tell me how this can be considered fair.
I have in the past complained about the bank's charges but to no avail. Now the Courts have given banks like Abbey the carte blanche to charge as they please.
I have been charged £35.00 by this same bank for not honoring a standing order and this even though I had paid in funds the same morning the payment was due to be made and assured by bank staff that no charge would be made to my account.
You will find in most cases, certainly in my case where these paralysing charges are imposed, that you find yourself in a never ending cycle of going overdrawn and charges be made to your account as a result of the overdraft.
The sad thing about this is when you raise this issue with the bank they refer you to the terms of Agreement which in my case did not even refer to such crippling charges being charged to your account should you go overdrawn.
Who do we turn to now that the OFT cannot now deal with unfair bank charge claims now that the Supreme Court has determined that the OFT do not have this power.
