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OFT Launches Test Case On Unauthorised Bank Overdraft Charges

ConsumerWatch / UK Banking Jul 27, 2007 - 10:18 AM GMT

By: Submissions

ConsumerWatch The OFT will today commence proceedings in the High Court for a declaration on the application of the law in respect of unauthorised overdraft charges.


See questions and answers for test case announcement .

Tens of thousands of complaints that these charges are unfair have been received by the County Courts and the Financial Ombudsman Service. The banks do not accept that the unfairness rules of the Unfair Terms in Consumer Contract Regulations apply. The OFT believes that they do and is seeking to establish this legal principle clearly in the court. The OFT considers that a quick determination of this point of principle will assist in securing a clear and orderly resolution of the fairness of these charges.

The test case complements the ongoing market study into personal current accounts, which addresses wider questions about competition and price transparency in the provision of personal current accounts.

The OFT will continue to work closely with the Financial Ombudsman Service and the Financial Services Authority, in addition to consulting with banks and consumer groups.

NOTES

1. In March 2007 the OFT announced a formal investigation into the fairness of unauthorised overdraft and returned item fees (referred to as 'unauthorised overdraft charges'). This followed on from the OFT's initial review of such charges, where the OFT concluded that it shared the public concern about the level and incidence of bank current account charges, but recognised that applying the general principles set out in 2006 in relation to credit card charges is not straight forward.

2. The other parties to the test case are Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HBOS plc, HSBC Bank plc, Lloyds TSB Bank plc, Royal Bank of Scotland Group plc, and Nationwide Building Society. Together these current account providers account for about 90% of personal current accounts in the UK. The OFT has entered into an agreement with these current account providers in relation to the litigation process to facilitate an orderly and timely resolution of the legal issues.

3. The OFT continues its UTCCRs investigation into whether the level of charges is fair and will publish its findings and proposed action by the end of the year, as announced in March 2007.

4. If, in the light of the UTCCRs investigation, the OFT decides to take action because it finds the charges to be unfair but is not able to secure voluntary compliance, it will proceed to a second stage court case applying for a ruling that the charges are unfair.

5. In the course of its work on the issue the OFT has liaised closely with the Financial Services Authority and Financial Ombudsman Service and has also held discussions with the main banks. The FSA is announcing today that it is issuing a waiver from its complaints handling rules that apply to unauthorised overdraft charges, following the OFT's decision to initiate a test case.

5. The OFT's market study is taking a holistic look at whether the personal current account market is working well for consumers. In particular it will assess the extent to which consumers help drive competition. The market study is currently in its evidence gathering phase, and the OFT will publish its findings by the end of the year.

http://www.oft.gov.uk


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Comments

johnharrison
02 Sep 07, 03:18
bank charges

banks have stopped paying out on all charges refunds until the OFT have looked further in to these charges through court but they are still stealing our money by still charging us these illegal fees.


James Lee
28 Nov 07, 21:10
Still Charging bank cahrges

I have a question and I feel its a question most people are wondering.

Why are banks still able to charges us bank charges, while the case of unfair bank charges is currently on going?

Surely if the banks are able to still charge us then we are still entitled to continue our claim?

It seems that we are continued to be charged to this current day and have even less powers to do anything now becasue of the OFT decision to suspend all claims till the case id solved. Unfortunately some of us dont have the time or finances to keep giving the banks our money till this case is resolved.


ryan
17 Jul 08, 12:16
bank charges

if you went into a shop and lifted a loaf of bread to feed your kids you'd get arrested yet these banks steal money from people and dont even pay it in the first place yeah thats good british law eh,bankrupt the lot of them


dawn
29 Aug 08, 15:39
Crooked Banks

They are Crooks, my account is with First Convience Bank, they are located in alot of Walmarts. They are charging me

out the wazzooo. I dont know what other choice I have. I am going to continue the argument with them but they dont care.

I will close the account or let them close it because I dont have a deposit.They are nuts.


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