OFT scraps plans to take further court action against banks
Consumer watchdog, the Office of Fair Trading (OFT), has announced it is to abandon plans to take further legal action against banks regarding unauthorised overdraft charges.
At the end of last month, the Supreme Court ruled in favour of the banks over the fairness of the charges.
The test case originally commenced in July 2007 after it was discovered that banks and building societies were charging over £35 for a bounced cheque, standing order or direct debit.
Campaigners claim the actual cost incurred by the financial institutions could be as little as £2.
Since the test case, around 1.2 million customers have lodged complaints over “unfair fees” however, most claims are now expected to fail.
Commenting on its plans to scrap further action, the OFT said: “It has concluded that any investigation it were to continue into the fairness of current unarranged overdraft charging terms under the Unfair Terms in Consumer Contract Regulations (UTCCRs) would have a very limited scope and low prospects of success.”
“Given this, it has decided against taking forward such an investigation,” the OFT said.
However, it did say: “A number of options are available to secure the changes that the OFT wants to see, ranging from voluntary action to legislative change. The OFT will now discuss these issues intensively with banks, consumer groups and other organisations, with the aim of reporting on progress by the end of March 2010.”
The Treasury has said that via the Financial Services Bill, consumers will have “greater powers and protection for the future, including the ability to take a group action through the courts wherever there is mis-selling or abuse on the parts of banks.”