OFT rejects defence in bank charges case

by Gill Montia

Story link: OFT rejects defence in bank charges case

The Office of Fair Trading (OFT), which is bringing a case in the High Court to establish the legality of certain bank charges, has rejected the main defence put forward by the banks.

The case is due to be heard in January of next year and the banks are arguing that the charges in question, for unauthorised overdrafts and other current account matters, pay for a service provided to customers.

As such, they would not be covered by the 1999 Unfair Terms in Consumer Contract Regulations.

The OFT has stated that it does not believes any of the charges in question constitute a service fee.

It is likely that any ruling by the High Court will be taken to appeal by the losing side and if so, the case could be heard by the House of Lords, which could delay the outcome for over a year.

The FSA is also criticising some of the banks’ terms and conditions, stating that they: “do not provide the consumer with a fair opportunity to understand how they apply” and are “liable to mislead” customers.

In an interview for the BBC’s Money Programme to be broadcast on Friday of this week, John Fingleton, chief executive of the OFT, challenges the concept of free banking.

He suggests that “consumers pay for banking through surprises and through stealth”.

The British Bankers’ Association has criticised Mr Fingleton for making the remarks whilst a party to ongoing litigation with the banks.

It is estimated that High Street banks have so far refunded around £570m to 330,000 customers complaining of unreasonable charges.