UK banks investigations widen

Regularity bodies in the UK are set to widen their studies into banking and bank charges after months of investigations into bank charges have already been carried out.

The Office of Fair Trading and other financial regulators in the UK have been looking into the fairness of extortionate charges for exceeding an overdraft, having a returned cheque, or having a returned direct debit. Banks have been charging up to forty pounds or more in some cases in these situations.

The bank charges have been branded unlawful and unfair by regulators, and as a result many consumers have been able to reclaim their charges going back up to six years, and sometimes amounting to thousands of pounds. The OFT is likely to make a decision later this year on what is deemed a fair charge for administration that costs the bank between £2 and £5. In the meantime, consumers continue to try and reclaim their past charges.

Now that the study and review has been extended it is being described as one of the largest investigations into banking ever carried out. As part of the extended investigation regulators will be looking into the costs of banking, how the end of free banking might affect consumers and the economy, and will also continue to assess the fairness of bank charges. It is thought that placing a low ceiling limit on these charges could result in many banks charging all customers a monthly fee for holding a current account.

With regards to extending the investigation one OFT official stated: “This will provide the necessary context for assessing the fairness of unauthorised overdraft and returned item charge before we apply the law in this area.” 

A National Consumer Council official also commented on the situation, stating: “Banks must deliver a fair deal for consumers and stop dragging their customer service reputation further into the mud by waiting for regulatory action.”

Tom Smith
15th May 2007

Tags: charges, bank, oft, costs, fees, penalty, regulators, accounts