A Court Ruling has overturned a previous decision to allow the Office of Fair Trading to investigate the fairness of charges for unauthorised overdrafts. Many people get stung for huge fees and interest rates when they go overdrawn without any agreement in place. The credit crunch and job losses have put many more people in the vulnerable position, and banks have been criticised for punishing many loyal customers at the time when they most need assistance.
It is estimated that banks make around £2.6 billion per year on these fees. The banks argue that the fees allow free banking for the majority of people, however, it is the people that can least afford to pay the fees that get charged. People that have stable jobs, a good income and a smaller mortgage have no trouble staying in the black, and yet they are the ones with free banking.
The credit crunch does not help matters as many banks have refused to lend people money leaving no option but to go overdrawn – the alternatives being to lose your home or business.
“The OFT will now consider the detail of this judgment before it makes a decision on whether or not to continue its investigation into unarranged overdraft charging terms. It will also explore with others the implications for consumers and for existing and future legislation and regulation.” The Office of Fair Trading, November 2009.
We recognise this issue has been of real concern to a large number of our customers and we are pleased that this decision now brings clarity for all parties. The banks will work with the regulators to ensure that the outstanding customer complaints are brought to a swift conclusion.” The British Bankers Association