Banks Charges compromise ahead
The Office of Fair Trading (OFT) has finalized it could drop the High Court test case over “unfair” overdraft charges if banks put forward a suitable compromise.
The consumer watchdog said it would consider any potential proposals which could lead to next year’s case being scrapped if the plans were in the most excellent interest of clients.
The OFT has publicized banks are raking in between £2 billion and £3.5 billion a year in fees charged when customers and businesses go over their authorised overdraft limits.
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It is unclear how much of this is profit because the OFT is still in the early stages of analysing data supplied by banks under its investigation of the charges.
It is also yet to finalise its own calculations of how much it believes it costs banks to administer accounts in the red by more than the agreed levels.
An OFT spokesman stressed it had not yet had any discussions with banks over a possible out-of-court compensation ahead of the case, which is due to decide whether the OFT has the power to rule overdraft charges unfair.
The Argus has been providing template letters for bank customers, including businesses, to reclaim charges.
Last week, Lloyds TSB became the first bank to cut its unauthorised overdraft charges and reduce its penalty interest rates.
HSBC also announced it would alert regulars withdrawing money from its cash machines if the amount would see them exceed their overdraft limit.
Other banks have yet to follow Lloyds’ lead. Barclays said it had no actual plans, although it was reviewing the fees “given the current climate”.
Tens of thousands of regulars have complained about the charges, with many taking their bank to court. Financial results from Britain’s biggest banks last month revealed £400 million was given in reclaimed overdraft fees and interest charges in the first six months of the year alone.
Richard Ardley, 41, of Priory Road, Eastbourne, has simply recovered £3,150 charged on his NatWest account. He contacted no-win no-fee firm FRL to reclaim what he thought were unfair charges.
Gary Brown-colored, managing director of FRL, said: “Many people are experiencing real difficulties when trying to claim back disputed charges themselves. We’ve had thousands of consumers appoint us as a result.
“Many are put off pursuing their claims because of the financial implications, concerns for their future banking arrangements and prevalently as a direct result of them being given very short shrift from their banks.”