AGL 40.40 Increased By ▲ 0.20 (0.5%)
AIRLINK 129.25 Increased By ▲ 0.14 (0.11%)
BOP 6.81 Increased By ▲ 0.21 (3.18%)
CNERGY 4.13 Increased By ▲ 0.10 (2.48%)
DCL 8.73 Increased By ▲ 0.28 (3.31%)
DFML 41.40 Increased By ▲ 0.15 (0.36%)
DGKC 87.75 Increased By ▲ 0.75 (0.86%)
FCCL 33.85 Increased By ▲ 0.50 (1.5%)
FFBL 66.40 Increased By ▲ 0.50 (0.76%)
FFL 10.69 Increased By ▲ 0.15 (1.42%)
HUBC 113.51 Increased By ▲ 2.81 (2.54%)
HUMNL 15.65 Increased By ▲ 0.42 (2.76%)
KEL 4.87 Increased By ▲ 0.09 (1.88%)
KOSM 7.62 Decreased By ▼ -0.21 (-2.68%)
MLCF 43.10 Increased By ▲ 1.20 (2.86%)
NBP 61.50 Increased By ▲ 1.00 (1.65%)
OGDC 192.20 Increased By ▲ 9.40 (5.14%)
PAEL 27.05 Increased By ▲ 1.69 (6.66%)
PIBTL 7.26 Increased By ▲ 1.00 (15.97%)
PPL 150.50 Increased By ▲ 2.69 (1.82%)
PRL 24.96 Increased By ▲ 0.40 (1.63%)
PTC 16.25 Increased By ▲ 0.01 (0.06%)
SEARL 71.30 Increased By ▲ 0.80 (1.13%)
TELE 7.25 Decreased By ▼ -0.05 (-0.68%)
TOMCL 36.29 Decreased By ▼ -0.01 (-0.03%)
TPLP 8.05 Increased By ▲ 0.20 (2.55%)
TREET 16.30 Increased By ▲ 1.00 (6.54%)
TRG 51.56 Decreased By ▼ -0.14 (-0.27%)
UNITY 27.35 No Change ▼ 0.00 (0%)
WTL 1.27 Increased By ▲ 0.04 (3.25%)
BR100 9,967 Increased By 125.2 (1.27%)
BR30 30,751 Increased By 714.7 (2.38%)
KSE100 93,292 Increased By 771.2 (0.83%)
KSE30 29,017 Increased By 230.5 (0.8%)

Britain's consumer watchdog has dropped a two-and-a-half year probe into overdraft charges that could have cost banks billions of pounds, following a surprise court ruling in favour of the country's lenders last month. The Office of Fair Trading (OFT), however, said it still had "significant concerns" on current accounts and would now hold talks with banks and their customers to look at alternative solutions, including a voluntary deal or new legislation.
Tuesday's move, which disappointed scores of consumer groups, was largely expected in the industry after a Supreme Court ruling in November said the consumer watchdog could not use customer protection rules to investigate whether unauthorised overdraft fees - which can be as high as 35 pounds per breach - were unfair.
The court case involved Britain's largest retail lenders, HSBC, Lloyds Banking Group, Abbey (now owned by Spain's Santander), Royal Bank of Scotland, Barclays, Clydesdale (part of National Australia Bank), HBOS - now owned by Lloyds - and building society Nation-wide. "From a consumer perspective, it's obviously really disappointing," said Michelle Slade, personal finance expert from Moneyfacts.
She added that despite consumers having the option to pursue individual claims, many will opt to back down at this stage. "Most people are going to follow the OFT and say, I'm not likely to get my money back and give up. It looks like the banks have won," she added.
The OFT said on Tuesday that the court ruling meant any investigation into the fairness of unarranged overdraft charges would have a "limited scope" and little hope of succeeding. "The Supreme Court judgement was not the outcome we had hoped for and was disappointing for many bank customers," OFT Chief Executive John Fingleton said. "Having now considered in detail all the options available to us in light of the judgement, we have decided not to continue what would be a narrow investigation with limited prospects of success," he added. The banks welcomed the decision on Tuesday, and said they would continue to work with the OFT.
"The banks understand customers' concerns, and talk to their customers regularly and develop accounts in line with feedback," the British Bankers' Association said in a statement, adding the current account market was "dynamic and competitive" and banks continued to improve the transparency of charges.
But the OFT vowed it would continue to fight to protect consumers against opaque overdraft charges through voluntary arrangements with the banks "or by other means". "We are committed to securing significant changes to unarranged overdraft charges going forward," said Fingleton. The OFT's 2008 market study found banks earn around a third of their retail revenues from unarranged overdraft charges which it said were not subject to effective consumer controls.

Copyright Reuters, 2009

Comments

Comments are closed.