OFT pleased with overdraft charges ruling

Posted 2008-04-23

The Office of Fair Trading (OFT) has welcomed the decision by the high court that it can regulate overdraft charges imposed by banks.

In a test case brought by the OFT and eight banks, Mr justice Andrew Smith stressed that the banks charges were not necessarily unfair but the ruling paves the way for enquiries into them.

However the judge did reject the offices claim that the banks terms and conditions were unintelligible.

In a statement, the OFT said it will work with banks to make sure that the market is fair for consumers, but was pleased with the judges ruling.

This is an important early milestone for the OFT and our investigation into this area of high consumer interest. We are now analysing the implications of the judgement for our overall investigation into the fairness of the terms, it stated.

It is estimated that banks earn up to £1 billion annually from unauthorised overdraft charges.

Barclays, HSBC, Clydesdale, Lloyds TSB, the Royal Bank of Scotland, HBOS, Abbey and the Nationwide building society were the institutions involved.

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