OFT rejects banks’ main defence

The main defence put forward by UK banks just ahead of the bank charges super-case to be held in 2008 has been rejected by the Office of Fair Trading.


According to the banks the charges applied on customers’ accounts cover the cost of providing a service, and therefore are not covered by consumer regulations. However, OFT officials have stated that the charges applied to the accounts of those that exceed their overdraft limits do not constitute service charges in their eyes.

The issue over bank charges, which has been raging for the past couple of years, is to be heard at the High Court in a test case in January 2008. In addition to rejecting the defence put forward by the banks, the Office of Fair Trading has slated the terms and conditions used by banks in its submission to the High Court in preparation for the test case. The OFT has stated that the terms and conditions “do not provide the consumer with a fair opportunity to understand how they apply”.

OFT officials claim that some of the terms and conditions used by banks are misleading. John Fingleton, the Chief Executive of the Office of Fair Trading, said that he did not think that customers in the UK enjoyed free banking when he spoke on the BBC’s Money Programme. He stated: “At the moment consumers pay for banking through surprises and through stealth. They don’t see what they pay – very often they pay when an unexpected event happens like an unauthorised unexpected overdraft.”

An official from the British Banker’s Association stated that the fees and charges were clear and fair, stating: “The banks have actually made it clear that they see the unauthorised overdraft fees as a fee for a service.”

Alan Wright
24th November 2007

Tags: office of, bank fees, banks, office of fair trading, bank charges