Consumers told to fight bank charges alone as regulator throws in towel
OFT drops bank charges legal case against banks
By Elliot Wright, 22nd December 2009
The Office of Fair Trading (OFT) has dropped its bank charges
case against the banks, but is encouraging customers to carry on
claiming.
The OFT made the decision after the Supreme Court ruled last
month that the regulator did not have jurisdiction on unauthorised
overdraft charges and could not assess the charges on grounds of
fairness.
In a statement released this morning the OFT chief executive,
John Fingleton, said: "The supreme court judgment was not the
outcome we had hoped for and was disappointing for many bank
customers.
The decision is a massive letdown for more
than a million consumers who had hoped to reclaim an estimated
£20bn worth of unfair bank charges.
"Having now considered in detail all the options available to us
in light of the judgment, we have decided not to continue what
would be a narrow investigation with limited prospects of
success."
The decision is a massive letdown for more than a million
consumers who had hoped to reclaim an estimated £20bn worth of
unfair bank charges.
However, the OFT has said that consumers can still make bank
charges claims on an individual basis.
How people can go about making claims is still unclear but the
OFT has indicated that the Financial Ombudsman Service (FOS) may be
available for consumers wishing to make complaints against their
bank charges.
It is also expected that the government and the regulators will
work with the banks to ensure that consumers are not mistreated and
charged disproprtionate sums for breaking contract
terms in the future.
Nick Clegg, leader of the Lib Dems, said: "The Liberal Democrats
will continue the fight for fair bank charges in Parliament and
push for a change in the law if necessary so that high street banks
cannot keep ripping off their customers.
"Having come so close to overhauling an unfair system of
charging that penalises vulnerable groups of people, I know that
the campaign will not just stop."
Positively, as a result of the legal proceedings, banks
including HSBC, Royal Bank of Scotland, Halifax and five other
lenders, have already begun to reduce their unauthorised overdraft
charges and are making it easier for customers to switch accounts
should they be unsatisfied.
In addition, the decision does not affect consumers' ability to
claim compensation for other banking grievances such as credit card
charges and mis sold payment protection insurance.
Helpful links:
Claims Financial
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