OFT expected to put £10 limit on unauthorised overdraft charges???

[Amethyst]

The OFT are expected to publish a report in the next two weeks putting further pressure on banks to bring down their pricing of current accounts for customers who go over their overdraft limits.

A figure of £10, apparently supported by the government, has been suggested by sources from the Treasury and the Banks and the OFT's report is expected to ask banks to simplify their charging structures and make things much more transparent for consumers.

The report should be the final conclusion from the Office of Fair Trading in their market study into the Personal Current Account market in the UK which began in 2007. Their interim report can be found http://www.oft.gov.uk/shared_oft/per...ts/OFT1123.pdf. The final report has been held up waiting for the legal investigation into unauthorised overdraft charges, which has been the subject of litigation across the country, and between the OFT and the eight largest banks up to the Supreme Court., to conclude.

We will update as things are clarified and confirmed by the OFT and the Government. Legalbeagles put their views forwards to the market study in November 2007 ( Beagles formal response to OFT PCA Market Study Consultation Nov 2008 - Legal Beagles ) and breifly updated our position in February 2010 ( Updated Response to the PCA Report - Feb 2010 - Legal Beagles ) following a meeting with the market study team at the OFT's offices in London.

Around 60,000 consumers started legal action against their banks to recover the excessive fees which often hit £35 a time, sometimes costing consumers hundreds each month. A further 1.25 million customers complained to their banks and the complaints were put on hold until the high court litigation was concluded, which it was in November 2009.

It is not expected that the new suggested charge limits will mean refunds for any customers charged above that limit in previous years, although many are expected to continue their claims in the courts system under unfair relationships legislation.

[Amethyst]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

Compulsory fees for bank accounts (other than basic accounts) on the cards, in return for lower charges, according to WL today.

[poltie]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

I hope there is going to be clarity in the statement they release, because there is nothing to indicate here that they cannot continue thier snowball charging system of per day. This is something i and i'm sure others would like to erradicate, if the charge comes off immediatly then it is 3 days before you get the letter it is the same as present......£40.

[WendyB]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

well if the fee is £10 for going overdrawn, or over your limit (i.e unauthorised overdraft) then surely it cannot be per day,it must be a one off every time you go over,because by the very fact that you go into unauthorised overdraft, you get charged, and once you are over, you stay over till you credit enough in to take you back under again. So then you wouldn't get charged again until/unless you went into unathorised again?

Well it makes sense to me anyway lol

[EXC]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

The report should be the final conclusion from the Office of Fair Trading in their market study into the Personal Current Account market in the UK which began in 2007.

I'm not sure it will be the final conclusion but another interim report. The briefing document for the 4 February meeting said '' The OFT expects to make a statement on progress on unarranged overdraft charges in March 2010''.

[Kafka]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

Compulsory fees for bank accounts (other than basic accounts) on the cards, in return for lower charges, according to WL today.

I would be interested to know why the distinction between standard and basic accounts is being raised now, when this was ignored in the Test Case.

As a result, the growing number of people who need to use basic accounts are now saddled with a flawed judgment permitting unfair charging that states that 'unauthorised overdraft fees' are a core part of all bank accounts, even though they are expressly forbidden for basic accounts and not possible to happen other than through the bank's own charges.

[EXC]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

As a result, the growing number of people who need to use basic accounts are now saddled with a flawed judgment permitting unfair charging that states that 'unauthorised overdraft fees' are a core part of all bank accounts

I don't think judgment is saying fees are a core part of all bank accounts - only that they can be determined as such, where the fees exist.

[Kafka]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

I don't think judgment is saying fees are a core part of all bank accounts - only that they can be determined as such, where the fees exist.

But surely the key point here is that the terms of a basic bank account expressly rule out any form of OD whatsoever. They will not honour a request for payment where there are insufficient funds, they won't give money on a cashcard that isn't there, there can never be a credit limit and you can't guarantee a cheque because there's no cheque book. In short an OD can never be granted and does not need considering, because it will always be rejected automatically. The only way a basic account can ever go over limit is by the bank applying charges and pushing it over (which they do at every opportunity).

Even the banks' barristers would struggle to argue that the 'unauthorised overdrafts' that they claim to grant (but actually don't) can apply to basic accounts, when the terms are categoric on the subject. It was always a surprise to me that the 'Test Case' never examined actual examples of charges on accounts or drew this very important difference between the types of current account.

[EXC]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

It was always a surprise to me that the 'Test Case' never examined actual examples of charges on accounts or drew this very important difference between the types of current account.

I think that's just it really. The preliminary issue was only ever about the applicability of exemption 6.2 as a principle and so charge examples and distinctions between account types weren't relevant in that determination. Though of course they they would have been if it had got to the substantive issue stage.

[Amethyst]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

that the terms of a basic bank account expressly rule out any form of OD whatsoever.

be interested to see one of those terms


Basic accounts are a myth.

Page 12 - http://www.lloydstsb.com/media/lloyd...t_brochure.pdf

Cash Card Account from Barclays - Barclays

http://www.moneymadeclear.fsa.gov.uk...unts_table.pdf - basic bank account table from FSA

the truth is a basic account has a debit card (shop floor limits = create overdraft = charges = bigger overdraft ) and DD's/SO's which are not paid over limits but sometimes are (eg if the payment is for another product with same bank ) and incur charges for bouncing which take you in to overdraft.

The only true basic account which wont allow an overdraft (except, of course in limited circumstances) seems to be the Lloyds Control Account - Lloyds TSB - Control - but that costs you £10 a month - AND £10 per returned item (DD/SO etc)


If you dont want overdrafts or charges then get a Post Office Card Account and live on cash only - with a prepay debit card for ''internet'' ''telephone'' shopping/bill payments.

[natweststaffmember]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

I'm not sure that the LloydsTSB control account stops the account going in the excess since if the £10 to stop it doing so goes out when there is £5 in the account then by definition it will take it into excess. I would say that there is no account where you get a card that will 100% prevent you going into excess.

[hicskis]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

You can peg a limit here but the banks will just find another way to raise their revenues - we are heading very quickly towards fee based banking like they have in Canada and Germany.

I'm sure though that there will be plenty of competition, and acounts to suit everyone out there - however people need to understand to mange their finances front and foremost because many of these great "offer" accounts will hide hidden extras as value to the banks - such as monthly fees that you do not need.

There is no reason why you should not be able to run any account at zero cost - I have done so for years and I think that is what we need to focus on becuase i can see this getting out of hand.

[natweststaffmember]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

You can peg a limit here but the banks will just find another way to raise their revenues - we are heading very quickly towards fee based banking like they have in Canada and Germany.

I'm sure though that there will be plenty of competition, and acounts to suit everyone out there - however people need to understand to mange their finances front and foremost because many of these great "offer" accounts will hide hidden extras as value to the banks - such as monthly fees that you do not need.

There is no reason why you should not be able to run any account at zero cost - I have done so for years and I think that is what we need to focus on becuase i can see this getting out of hand.

You have run your account in credit and the bank have creamed off the interest forgone on your credit balance. In fact you have been hit for hidden revenue more than you think.
Do you have a card?
Do you use ATM machines?
Do you use the card in shops?

Do you think there is no cost to the bank? How do you think you have been paying for that fee based service without incurring charges? That's right, by not getting paid a decent rate of interest while the bank have invested that money and creamed your account for interest.

I don't agree with you because while YOU can run an account without incurring fees(because you do not pay for them because of the banks' charging model) it does not mean that the BANK has not incurred a cost involved in you running your account.

[hicskis]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

By natweststaffmember:
You have run your account in credit and the bank have creamed off the interest forgone on your credit balance no they haven't because any spare money is parked where it earns good interest or better still is invested to bring a capital return. In fact you have been hit for hidden revenue more than you think. only on foreign exchange and a few other places - but i was aware of those costs - in fact in Canada on some accounts you pay per transaction - i used my card once to withdraw cash over the counter (10 transactions were free in a month) - and then bought everything in cash - well most that i could - the brilliant thing was a year later having been stuffed with a maximum cash withdrawal of $500 per over counter transaction - when i did go over the 10 transactions i got all my money back cause i said it was unfair that they stuck me with the reduced limit so they could max out their transactions costs - they' had to be fair and they lost
Do you have a card? many
Do you use ATM machines? only those that don't charge a fee
Do you use the card in shops? all the time - on-line as well

Do you think there is no cost to the bank? of course there is How do you think you have been paying for that fee based service without incurring charges? i've not been paying That's right, by not getting paid a decent rate of interest while the bank have invested that money and creamed your account for interest. whatever

I don't agree with you because whileYOU can run an account without incurring fees(because you do not pay for them because of the banks' charging model) that was my point - you can because the model lets you and so will the new models too - that's why people need to educate themselves because they are paying for stuff they don't need.it does not mean that the BANK has not incurred a cost involved in you running your account.

I agree that the bank's provide a service and that costs, how they do that is their choice and is clearly outlined in the contract - consumers also have a choice in how they operate their account and will continue to do so. This is the fundamental reason why these new legal arguments will fail.

[Amethyst]

Re: OFT expected to put £10 limit on unauthorised overdraft charges

I do think we will see a lot more packaged stuff and linked products - like Abbeys investment or mortgage Zero current account.


Just some nice reading European Commission » Internal Market » Consultation on Tying


http://ec.europa.eu/internal_market/.../report_en.pdf


and subsequently read UCPD http://ec.europa.eu/consumers/cons_i...s_laws_uk1.pdf
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