Bank Charges Case Dropped by OFT
No further court action will be taken by the Office of Fair Trading (OFT) over the unauthorized overdraft fees.
This is a big disappointment for the 1.1 million people who had hoped to have bank charges refunded.
The OFT decided to drop the court case after the Supreme Court ruled last month that the OFT did not have the power to investigate unauthorized borrowing charges under the Unfair Terms in Consumer Contract Regulations. These are the fees that a consumer pays if their account is overdrawn or over the agreed overdraft limit.
Chief Executive of the OFT, John Fingleton, said: “The Supreme Court judgement was not the outcome we hoped for and was disappointing for many bank customers. Having now considered in detail all the options available to us in light of the judgement, we have decided not to continue with what would be a narrow investigation with limited prospects of success.”
More than one million people complained about these fees and most of the claims had been on hold until last month’s Supreme Court ruling. There is now no chance the banks will automatically refund the charges to the customers.
The moneysupermarket.com’s head of banking, Kevin Mountford, said:
“For those still trying to reclaim charges, the OFT has left the door open for them to take their complaint to the Financial Ombudsman Service, but their chance of success has lessened following this decision. This shouldn’t stop people trying and no doubt some will pursue this option, but many are likely to quietly drop their complaints.”
The OFT is still concerned about the way the current account market operates in the UK and they will continue to try and change the way banks charge.
Fingleton added: “We are committed to securing significant changes to unarranged overdraft charges going forward, whether through voluntary agreement with the bank or by other means. Customers can play their part by looking for value for money and switching accounts, if necessary.”