Thread: Great update on bank charges ???????

Info " Taken " from another site, but thought you might like to know.

LAST BIG NEWS

WATCH BBC2 ON FRIDAY THE 16TH MONEY PROGRAME 2007
GREAT UPDATE ON BANK CHARGES.

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Should be interesting!

Last Updated: Thursday, 15 November 2007, 13:37 GMT

OFT rejects banks' charges claim

A High Court hearing will sort out the issues next year

The Office of Fair Trading (OFT) has rejected the main defence put forward by banks over their current account charges ahead of a key court case.
The banks argue their charges pay for a service provided to customers, and are therefore not covered by current consumer regulations.
But the OFT says it believes none of the charges applied when customers go overdrawn constitute a service fee.
The matter is due to be heard in the High Court in January 2008.
'Stealth'
At the moment consumers pay for banking through surprises and through stealth


John Fingleton, Office of Fair Trading chief executive


In its formal submission to the High Court, the OFT also criticises some of the banks' terms and conditions, which it says "do not provide the consumer with a fair opportunity to understand how they apply".
It believes some of them are "liable to mislead" customers.
In a separate interview for the BBC's Money Programme to be broadcast on Friday evening, OFT chief executive John Fingleton dismissed the idea that customers enjoy free banking.
"At the moment consumers pay for banking through surprises and through stealth," said Mr Fingleton.
"They don't see what they pay - very often they pay when an unexpected event happens like an unauthorised unexpected overdraft," he added.
Legal process
The British Bankers' Association (BBA) insisted that the fees customers pay are "fair and clear".
"The banks have actually made it clear that they see the unauthorised overdraft fees as a fee for a service," said BBA chief executive Angela Knight.
And the organisation criticised Mr Fingleton for the timing of his remarks.
"We do find it extraordinary that a statutory body that is party to ongoing litigation with the banks... should be making statements through the media which could, of course, be prejudicial to the court case and the OFT's own work," said a spokesman.
The question of fees versus penalties is at the nub of the dispute.
People should carry on claiming while we wait for the outcome from the High Court


Adam Williams, Which?


The OFT says penalty charges fall foul of the 1999 Unfair Terms in Consumer Contract Regulations, and it wants the High Court to rule accordingly.
In their formal defence submitted to the court, the banks insist their "service fees" fall outside the scope of the legislation.
But the OFT's response to that defence rejects this argument outright.
It says none of the charges levied by the banks relate to the provision of services to customers and therefore are subject to the Unfair Terms regulations.
The test case is scheduled to be heard sometime between 14 January and 28 February 2008, and could take up to two weeks.
Consumer action
The losing side is expected to appeal, with the case probably ending up in the House of Lords, a process which could drag out the matter for more than a year.
It is estimated that banks have so far refunded about £570m to 330,000 customers.
Since the test case was first announced at the end of July, most courts have been halting new and existing claims for the return of overdraft charges until the legal issues are settled.
This means the banks are protected, for the time being, from any new legal action in the courts and from any new complaints to the Financial Ombudsman Service.
The banks are also still covered by a "waiver" granted to them by the Financial Services Authority (FSA) at the end of July.
This means they do not have to make progress with any new or unresolved complaints about their charges until the outcome of the court case.
But consumer groups are urging people not to stop complaining.
"People should carry on claiming while we wait for the outcome from the High Court," said Adam Williams from Which?
"Even though the banks won't process the complaint, they will still have to acknowledge it.
"And if the OFT wins, as we hope it will, that means your complaint is already in the system and so you should be paid out more quickly," he added. The FSA said the waiver would remain under review, and is expected to announce later this month whether that waiver should be continued, changed or even revoked.

From The Times

November 16, 2007


Banks accused of condoning criminality via overdraft limit breaches




Grainne Gilmore and Rebecca O’Connor


Banks have been accused of condoning criminal behaviour among customers by allowing them to exceed their agreed overdraft limits.
In court documents published yesterday, the Office of Fair Trading said that customers who paid for goods or services without sufficient funds in their accounts “risk committing a criminal offence”. However, the banks “use language that appears to treat such conduct as acceptable or proper”, it said.
The document was part of legal arguments in the run-up to the High Court case over bank charges between the OFT and eight major banks, including HBOS, Barclays, HSBC and Lloyds TSB. The case is expected to be heard in January.
The case will determine whether the OFT has the authority to recommend changes to overdraft charges. Hundreds of thousands of consumers have already reclaimed the charges from their bank because they believe they are unfair.


OFT: Banks make £3.5bn a year on overdrafts

Watchdog prepares for battle over bank charges


In their defence statement, the banks said that unauthorised overdraft charges, which can be as high as £38 for each infringement, are essential to cover the cost of current account banking. But the OFT said the fees are “uneconomic” and “disproportionate”.
The watchdog said that some of the banks’ terms and conditions were not in clear and easily understandable language, and in some cases were liable to mislead consumers. Cavendish Elithorn, senior director at the OFT, said: “When you can’t tell what a product is going to cost you over a year, it is difficult to compare different accounts.”
Banks and building societies are estimated to make between £2 billion and £3.5 billion a year from overdraft charges.
The OFT indicated yesterday that it would continue to fight the banks on overdraft charges even if it lost the case in the High Court.
A senior OFT figure said that it could make recommendations to the Government to change the law, refer the banks to the Competition Commission or run a consumer awareness campaign.
Mr Elithorn said: “Banks should have a business model that is clear to consumers . . . Relying on small print is not, in our view, a sustainable business model. If the law doesn’t apply, we need to think about what alternatives there are.”
If the OFT wins the case, it is likely to press banks and building societies to change their overdraft charges to a level it deems to be fair.
The Financial Services Authority has allowed banks to stop making repayments to bank customers who have complained that their charges were unfair until the court case is decided.
A British Bankers’ Association spokeswoman said: “Banks believe the fees customers pay for unarranged overdrafts are fair and clear. But because customers, as well as the banks, would welcome legal clarity, some of our members have joined the OFT to approach the courts for a ruling on this issue. The issues are subject to a court case which commenced at the end of July. The first hearing is due in January.”

Thread moved here.
For the record CAG was aware of this programme ourselves.
Additionally the OFT this week published its defence to banks .34 pages and makes for good reading.
Have a look on the OFT website.

Originally Posted by MilkTrayMan

???...Why would a Member with over 1K of Posts be Posting Threads in the Welcome Forum???...

Yawn.