Thursday April 24, 01:30 PM
Victory for OFT
By Kate O'Raghallaigh
The Office of Fair Trading (OFT) has received the approval of the High Court to assess the fairness of unauthorised overdraft charges.
The judgment will come as a blow to the seven banks (Abbey National , Barclays Bank (NYSE: BCS-P
- news) , Clydesdale Bank, HBOS (LSE: HBOS.L - news) , HSBC, Lloyds TSB Bank , and RBS (LSE: RBS.L - news) ) and one building society (Nationwide) who contested the OFTs view that unauthorised overdraft charges which in many cases amounted to £39 could, under law, be subject to an assessment of fairness.
The OFT said: This is an important early milestone for the OFT and our investigation into this area of high consumer interest. We are now analysing the implications of the judgment for our overall investigation into the fairness of the terms. The OFT also reiterated that the charges themselves have not yet been subject to an assessment.
According to financial research company Defaqto, £600m has been returned to banking customers who claimed back charges since 2007. David Black, principal consultant of banking at Defaqto said: The ultimate result of today’s ruling will have significant effects on the costs incurred for current account customers, including those who always stay in credit.
If, as seems likely, a cap is imposed on unauthorised overdraft charges, I view it as inevitable that the current account options will change for consumers.
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