A three-year investigation into UK bank charges on overdrawn customers ended with a whimper after the UK. Office of Fair Trading (OFT) said it will leave it to banks to improve their practices.
The backing down over the issue comes after the UK. High Court's surprise ruling in November that said the OFT didn't have the power to decide if the charges were unfair or not under existing consumer protection rules, leaving the consumer protection agency toothless to enforce any potential restrictions on the charges.
However, the OFT could have gone on to seek new legislation. It didn’t. The Financial Services Consumer Panel, an independent statutory body that works with financial markets regulator the Financial Services Authority on consumer issues, said the OFT's stance was "too weak, and will take too long to deliver real improvements." "Many customers, particularly the most vulnerable, continue to pay excessive bank charges and this situation has not been effectively resolved," it said.
The November court case was seen as a victory for banks and a blow to consumer groups who wanted the charges scaled back. However, if the banks had lost the ruling and were forced to lower their charges, the expectation was that the lost income would be recouped through other charges, such as a standard monthly fee on all checking accounts.
So the banks win again and again! And we the consumer lose twice, once helping them out of the “banking crisis and secondly when we go overdrawn. Did we the taxpayers charge them when they went overdrawn? No we lent them money.
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