Watchdog's bank fees shock. Sascha Hutchinson, This is Money 18 May 2006

[scorpio_manuk]

Thought this might be of interst to folks.

 

Watchdog's bank fees shock. Sascha Hutchinson, This is Money 18 May 2006

 

THE Office of Fair Trading looks set to back away from imposing any limits on overdraft charges, saying it has 'no commitment' to widening the implications of its earlier report into credit card charges.

 

NO COMMITMENT: The OFT says its priority is credit cards and there is no commitment to the issue of overdraft fees

 

In April, the OFT ruled that credit card default charges of more than £12 were unlawful, and said that the principle of fee limits could be applied much more widely to products and services like mortgages, overdrafts and store cards.

 

But a spokesperson for the OFT told This is Money there was no commitment to imposing limits similar to the £12 to anything other than credit cards.

 

'Our priority is the issue that we've been looking at, and that's credit card charges,' a spokesperson said. 'We've made no commitment to do anything other than that.'

 

She added that they had told banks they expected them to apply the principle 'across the board'.

 

This is Money has previously reported on the massive implications for the banking industry if overdraft fee limits were introduced. Financial analysts estimate that the card ruling could cost the banking industry up to £1.5bn. They added that limits on overdraft fees could spell the end of free banking.

 

In its April ruling, the OFT said that banks were only justified in charging enough to cover the cost of dealing with the default. The banks have up until May 31 to respond.

 

Credit card companies have been raising their fees for several years as they struggle to make up lost revenues thanks to the introduction of 0% cards. The charges for going into an unauthorised overdraft can be up to £30 a day.

 

Consumers are becoming increasingly angry over the excessive fees that are applied to their cards and accounts. Complaints to the Banking Code Standards Board were up 50% last year, and most were about unfair charges.

 

Consumer groups have urged people who feel that they have been overcharged by their bank or card company, to take action through the courts if necessary.

 

The reason they say people will be successful is because of a difference specified in the law between charges that can be imposed for breach of contract and penalty charges.

 

Which? has been campaigning for some time to force the banks to open their books and come clean on how they arrive at exorbitant fees, which can be in excess of £30 a day for becoming overdrawn by a minimal amount.

 

An analysis by Money Mail and This is Money found that Coventry Building Society is by far the fairest when it comes to overdraft charges, allowing every customer an interest and charge-free £250 overdraft buffer on all its accounts.

 

Halifax and Alliance & Leicester charged the most excessive fees.

[bernard coleslaw]

Hi scorpio_manuk

 

Already covered, see thread entitled "OFT backs away from bank fees" (the articles original headline).

 

BC

 

THREAD CLOSED TO AVOID MULTIPLE DISCUSSIONS ON SAME SUBJECT.