OFT Slates Loan Company

The UK watchdog, the Office of Fair Trading, has recently slated a well known loans company that specialises in lending to those that have damaged credit and are unable to find traditional finance from regular High Street banks. Read more

Tags: fact, yes loans, company, office of fair trading, credit, oft, anger, circles

What does the latest ruling in the High Court test case into bank charges mean?

The presiding judge in the ongoing High Court test case in to banking overdraft charges has recently made an announcement that has pleased the banking industry at a time when many are relieved to finally have some good news. The battle over bank charges began several years ago, when the Office of Fair Trading branded the charges that banks charge when someone goes over their overdraft limit as being unfair and unlawful. Read more

Tags: ongoing high court, someone, british bankers association, past charges, andrew smith, oft, bank charges

Banks find out that their charges are most likely unfair

Over the past couple of years the bank charges applied to accounts by banks have been at the centre of controversy, with some banks charging close to £40 per fee when the customer went over their overdraft limits and for returned direct debits and bounced cheques. Officials from the Office of Fair Trading were concerned because the charges were far too high, because they did not in any way reflect the costs incurred by the bank, which amounted to just a few pounds. Read more

Tags: decision, Law Crime, rbs, oft, memo

High court case appeal should not delay case by a year

According to the judge presiding at the recent High Court test case into bank charges, the decision by the UK banks to appeal against the ruling should not result in as serious a delay as some reports have indicated. Recent reports claimed that if banks appealed against the judge’s decision to allow the Office of Fair Trading to assess banks’ terms and conditions for fairness the case could be further delayed by over a year. However, Justice Andrew Smith has stated that this is not the case. Read more

Tags: uk, finance, oft, monthly bank, court case appeal, Court test case, bank charges, commence

Bank charge test case may be dropped

According to a recent report the Office of Fair Trading is considering dropping the test case over bank charges, which was planned for next year.

The test case was designed to make a final determination over bank charges following months of controversy and rows between banks and consumers. The battle started after campaigners and regulators branded the charges, applied for exceeding overdraft limits, bounding cheques, and returned direct debits, unlawful and unfair.

Officials from the Office of Fair Trading have confirmed that there is a chance that the test case will be dropped, but this will only happen if it is in the best interests of the consumer.

Officials stated that they may consider dropping the test case if banks decide to cut their charges to a level that makes them fair to consumers. Lloyds TSB has already cut its charges, but many experts state that it has not cut them enough.

One OFT official stated: “If we do our own financial analysis, and they come in with a number that is lower than our analysis would suggest is an unfair charge, there is no need for the court case to go forward. We will be looking out for what is the best outcome for the consumer.”

However, the banks are arguing that their bank charges have nothing to do with the OFT, and that officials have no power over their bank charges. The OFT is due to review charges to come up with a figure that it believes is fair.

If the test case does go ahead, many experts think that free banking could come to an end in the UK and that banks will start charging monthly fees for having a current account to recoup losses from bank charges.

Tom Smith
16th October 2007

Tags: charges, claim, drop, bank, court, case, fees

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: investigation, penalty, charges, accounts, fees, costs, regulators, bank

Beware of credit card costs

Britain’s top 20 credit cards use 12 different ways to calculate interest, meaning that ‘cheap’ credit cards could cost more than you may think.

According to Which?, the APR (annual percentage rate) figure may not be the best way to compare cards, but it adds that this could be just one way in which firms are duping consumers.

“People believe that APRs are a dependable way of comparing credit cards, but our research shows that APR cannot to be relied upon for true credit card comparisons,” said Alena Kozakova, principal economist at the consumer watchdog.

“Two people who have two different credit cards with the same APR and who use their credit card in the same way, could be paying very different levels of interest.”

In the Which? calculations, people paying off the same amount of money with identical spending could pay 43 per cent more in interest on cards charging 15.9 per cent depending on how the interest is calculated and when it is charged, while the best 15.9 per cent card can also work out cheaper than cards charging 11.9 per cent.

Which? has now complained to the Office of Fair Trading (OFT) and Ms Kozakov added: “Consumers have to be able to make meaningful comparisons on the basis of APR. We are calling on the OFT to standardise interest calculation methods so that consumers can compare like for like.”

Tags: calculation methods, Daskaloff credit card rating system, oft, figure, consumer