OFT probe into £5bn overdraft 'rip-off'

bookworm1363

At long last!!!!

http://www.sundaymirror.co.uk/news/tm_objectid=17431841%26method=full%26siteid=62484%26headline=exclusive%2d%2dbanks%2dbrought%2dto%2daccount%2dover%2dfees%2d-name_page.html

23 July 2006
EXCLUSIVE: BANKS BROUGHT TO ACCOUNT OVER FEES
EXCLUSIVE OFT probe into £5bn overdraft 'rip-off'
By Stephen Hayward Consumer Correspondent
HIGH Street banks are to be formally investigated over rip-off overdraft charges.

The Office of Fair Trading is to launch a probe into the penalty fees imposed on current account holders who slip into the red.

The investigation could lead to the big banks being ordered to slash their charges, which cost customers nearly £5billion a year.

Critics say the fees, which hit two in five account holders last year, bear no relation to the costs incurred by the banks.

Millions of customers are hit with the fines and administration fees every month. Going overdrawn by just a few pounds without permission brings penalties of around £30 a time, with interest charges of up to 29.8 per cent on top.

The OFT inquiry, due to be announced over the next fortnight, is likely to last several months.

It follows a ruling that similar penalties imposed on credit card customers who pay late or exceed their limit were "excessive" and should be restricted to £12. The OFT can take banks to court if they refuse to reduce fees voluntarily.

Its move comes as growing numbers of current account holders refuse to accept the penalties and challenge their banks in the courts.

Consumer watchdog Which? says customers paid £4.7billion in unauthorised overdraft charges in the past year alone. That works out at around £120 per current account holder. The banks - which made record £33billion profits last year - say their penalties are spelt out in marketing material and reflect the administration costs incurred.

But a Which? spokeswoman said: "These charges do not reflect the true costs incurred by banks when a customer goes overdrawn."

Which? has issued the banking industry with its own Asbo - an "antisocial banking order" - as part of its campaign to reduce the penalty charges. Eddy Weatherill, of the Independent Banking Advisory Service, said: "If the OFT really want to do something for consumers, they should make sure the system is properly regulated.

"The banks have been given free rein to plunder customers' finances and that has to end. We don't object to banks charging sensible fees but we do object to them remorselessly attacking customers' finances. It's immoral and unjustifiable."

BANK PROFITS IN 2005

HSBC £11.5billion
NatWest £7.6billion
Barclays £5.1billion
Halifax £4.9billion
Lloyds TSB £3.3billion

schiff

Brilliant find bookworm. I think that removes the last plank supporting their stance. A&L have been holding out paying the last £30 of my small £55 claim, and I've taken no further action as I'm not prepared to risk having my account closed.
Once the OFT get going on the banks and overdrafts, I'll be coming back for another go!

Should be made a sticky.

schiff :beer:

icefall

at long last, hip hip hooray, banks being brought to account

southernscouser

I think it's hilarious that they've been given ASBO's! :rotfl:

michaels

My mobile phone company charge much more than it costs them each month to service my account, so do Sky - can we look forward to the OFT investigating this for us? Afterall there are many more banks than mobile companies or tv suppliers so the bankin gindustry is likely to be more competitive than those others...

southernscouser

michaels wrote:

My mobile phone company charge much more than it costs them each month to service my account, so do Sky - can we look forward to the OFT investigating this for us? Afterall there are many more banks than mobile companies or tv suppliers so the bankin gindustry is likely to be more competitive than those others...

Sorry I'm confused!

It's about unlawful charges, not paying for a service!