News In Focus
29 October 2008
Banks begin appeal against OFT investigation
The major high street banks have begun a six-day Court of Appeal hearing in an attempt to avoid an official inquiry into the fairness of unauthorised overdraft charges.
The High Court ruled in April that the fees charged to personal current account customers could be investigated by the Office of Fair Trading (OFT) under the Unfair Terms in Consumer Contracts Regulations. However the banks are renewing their argument that the charges are exempt because they are legitimate remuneration for goods and services supplied to customers - i.e. the overdraft facility.
The OFT investigation would look at whether the charges, of up to £35 for a single bounced cheque, were fair. Campaigners claim that the cost to the banks is about £2.50.
The seven banks involved include HBOS, RBS Group, Lloyds TSB and the Clydesdale. The Nationwide Building Society is also a party.
It is estimated that a finding of unfairness could cost banks as much as £2.6 billion in lost revenue and £1bn in refunds.