The Office of Fair Trading (OFT) has decided not to pursue further its attempt to investigate the fairness of bank overdraft charges on current accounts, following a Supreme Court judgement against it last month.
While a continued investigation into bank charges by the OFT would have limited scope and low prospects of success, the OFT will continue to express significant concerns about the level of charges, which bring banks an estimated £2.5bn per year, about a third of their personal current account revenues.
With some banks charging £35 for an inadvertent or unauthorised lapse into overdraft, the OFT had declared that any bank charging more than £12 should be required to justify its charges in public.
A further indication of the true cost to a bank of processing an unarranged overdraft came earlier in the year, when the state-owned Royal Bank of Scotland (RBS) dropped its bank charges to a standard fee of £5.
More than a million refund claims for bank overdraft charges that were frozen in July 2007 now have little hope of success.
The challenge to the Office of Fair Trading’s investigation was led by a group of institutions who presented their case to the Supreme Court. They were Abbey, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB, RBS and Nationwide.
