Bank Charges - OFT throws in the towel
Discussion
http://www.telegraph.co.uk/finance/personalfinance...
[i]The Office of Fair Trading has decided not to take further legal action against the banks over bank charges.
Published: 7:44AM GMT 22 Dec 2009
The OFT said that any investigation into the unfairness of overdraft charges would have a "very limited scope and low prospects of success" and it has "decided against taking forward such an investigation".
The OFT said that it still continues to have significant concerns about the operation of the market for personal current accounts.
John Fingleton, OFT chief executive, said that it would continue to take the matter up with the banks and hope that they would "play ball" with them on a voluntary basis.
He added that 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.
Experts fear the decision leaves banks free to significantly increase their charges for the use of overdrafts.
The charges are expected to be increased as Britain’s high street banks try to recoup some of the losses from the credit crisis. Banks can earn billions of pounds of income from the fees.
However, statistics show almost half of the 54 million active current accounts already impose a monthly charge on customers.
The Office of Fair Trading had argued the charges levied on bank customers who go overdrawn are too high.
But the Supreme Court said bank customers agreed to pay the overdraft charges as part of the price of having a current account and that banks could not profitably offer such services without them.
Mr Fingleton 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.[/i]
Apologies if repost, search didnt turn up anything.
More scorn will no doubt be poured on the banking industry courtesy of this in the run up to Christmas.
Personally, I believe the charges are unfair in magnitude and that should be addressed, however, the levying of said charges is not unfair or unjust when the contract signed has been broken.
I will conceed though, that the banks do seem to enjoy taking the piss a bit with this. For example, a mate of mine recently got hit with 4 separate charges for direct debits bouncing due to lack of funds (pay in hadnt cleared in time). The issue being, that any two of the four direct debits could have been met, reducing that to two charges for returned DDs but they bounced all 4 as the cumulative couldnt be met. That kind of thing should not fly.
[i]The Office of Fair Trading has decided not to take further legal action against the banks over bank charges.
Published: 7:44AM GMT 22 Dec 2009
The OFT said that any investigation into the unfairness of overdraft charges would have a "very limited scope and low prospects of success" and it has "decided against taking forward such an investigation".
The OFT said that it still continues to have significant concerns about the operation of the market for personal current accounts.
John Fingleton, OFT chief executive, said that it would continue to take the matter up with the banks and hope that they would "play ball" with them on a voluntary basis.
He added that 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.
Experts fear the decision leaves banks free to significantly increase their charges for the use of overdrafts.
The charges are expected to be increased as Britain’s high street banks try to recoup some of the losses from the credit crisis. Banks can earn billions of pounds of income from the fees.
However, statistics show almost half of the 54 million active current accounts already impose a monthly charge on customers.
The Office of Fair Trading had argued the charges levied on bank customers who go overdrawn are too high.
But the Supreme Court said bank customers agreed to pay the overdraft charges as part of the price of having a current account and that banks could not profitably offer such services without them.
Mr Fingleton 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.[/i]
Apologies if repost, search didnt turn up anything.
More scorn will no doubt be poured on the banking industry courtesy of this in the run up to Christmas.
Personally, I believe the charges are unfair in magnitude and that should be addressed, however, the levying of said charges is not unfair or unjust when the contract signed has been broken.
I will conceed though, that the banks do seem to enjoy taking the piss a bit with this. For example, a mate of mine recently got hit with 4 separate charges for direct debits bouncing due to lack of funds (pay in hadnt cleared in time). The issue being, that any two of the four direct debits could have been met, reducing that to two charges for returned DDs but they bounced all 4 as the cumulative couldnt be met. That kind of thing should not fly.
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