OFT let consumers down AGAIN on Overdraft Charges

[Amethyst]

Legal Beagles are very surprised and extremely disappointed at the OFT's press release on bank charges which offers consumers no tangible protection against the imposition of unfair and extortionate charges.

The Office of Fair Trading's report, following nearly three years of investigation into the Personal Current Account Market in the UK, is extremely weak and does nothing to improve confidence in the regulator or the banks. Despite the OFT voicing ''significant concerns about the operation of the market for personal current accounts'' and promising that they are ''committed to securing significant changes to unarranged overdraft charges going forward'' the OFT have left it to the banks to decide the fate of some of the most vulnerable people in society.

The OFT walked away from the test case, walked away from their investigation and are now walking away from consumers.

The Government continues to push consumers into the banking system but has systematically failed to protect them, the banks have been allowed to get away with far too much for too long, and it appears now will be allowed to continue to do so.

LegalBeagles will continue fighting for a fairer future for consumers and remains strongly committed to assisting consumers in gaining redress from the Banks for unfair charges imposed historically. To that end we have engaged Anthony Scrivener QC (see biography) through our legal advisers Hausfelds LLP (see legal team) to establish the legal arguments for consumers wanting to reclaim via the courts and the Financial Ombudsman. The opinion will be made publicly available as soon as it is completed - within the next month. We also continue to look at the feasibility of a Representative Action on behalf of consumers.

To date banks are failing in their attempts to have consumers' County Court claims for the return of charges struck out on the basis of the narrow decision in the test case handed down by the Supreme Court. Legal Beagles' members have so far successfully defended applications from Lloyds, HBOS, Alliance & Leicester, Abbey, HSBC, Clydesdale Bank and Nationwide and have submitted amended claims based on their individual experiences of unfair relationships with the bank, based loosely on an initial opinion from Raymond Cox QC, instructed on behalf of MSE and consumer groups through the Govan Law Centre, Glasgow (see news story)

Sharon Coleman, co-founder of Legal Beagles believes a second opinion is necessary to clarify the arguments with a view to allowing the final opinion to be published publicly so that the arguments can be taken forward by individual claimants, consumer groups and other interested parties. ''We are working extremely hard on individual cases that were already in the court system from before the Supreme Court overruled the High Court and Court of Appeal judgments. We strongly believe the structure of personal account contracts which allows the imposition of these excessive charges, especially on low income and vulnerable consumers, to be unfair both morally and legally and we are delighted to have the team at Hausfelds LLP and Anthony Scrivener QC looking at the issues on behalf of consumers everywhere."


You can read the OFT's report here - Personal current accounts in the UK - The Office of Fair Trading
http://www.oft.gov.uk/shared_oft/per...ts/oft1216.pdf http://www.oft.gov.uk/news/press/2010/26-10


Once we have read it in full we will report further.

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

From the report:

7.10 To address the OFT's concerns regarding responsibility, in particular how
banks deal with customers in financial difficulty as a result of unarranged
overdraft charges, the major PCA providers have agreed:

• to publish their existing policies for dealing with consumers in
financial difficulty who incur UOCs (or their equivalents), and

• develop, in partnership with relevant stakeholders,best practice
guidance for how PCA providers deal with consumers in (or at
significant risk of being in) financial difficulty who incur UOCs.

[Mrleelee]

Re: OFT let consumers down AGAIN on Overdraft Charges

Same old rubbish from them as far as I can see. They went up against the banks and lost in a very public manner (although the point they lost on was just laughable). They don't want that again which is why they have given up and stepped aside for the banks to carry on screwing the less fortunate.

For me, this is the final 'go do what you like, we wont get involved no more' from the OFT to the banks.

[EXC]

Re: OFT let consumers down AGAIN on Overdraft Charges

----- Original Message -----
From: Sadrul Islam
To: EXC
Sent: Tuesday, March 16, 2010 8:44 AM
Subject: Restricted: OFT publication of report on bank charges


EMBARGOED UNTIL 10.30 AM 16 MARCH 2010
Dear Nick
Please find attached an embargoed copy of the OFT press notice in relation to the publication of the report on bank charges. Please note that this press notice is embargoed until 10.30am today. Please note that any links in the press notice to web pages or other relevant reports will be live in the final version at 10.30am.
The full report can be found on our website later today http://www.oft.gov.uk/advice_and_resources/resource_base/market-studies/completed/personal/

Regards
Sadrul
<<26 10 PCA Market study unarranged overdrafts.pdf>>
Sadrul Islam| Services| Markets and Projects | Office of Fair Trading
Fleetbank House | 2-6 Salisbury Square | London EC4Y 8JX | T: 020 7211 8254






Restricted: OFT publication of report on bank chargesRestricted: OFT publication of report on bank charges----- Original Message ----- From: EXC
To: Sadrul Islam
Sent: Tuesday, March 16, 2010 10:46 AM
Subject: Re: Restricted: OFT publication of report on bank charges

[enaid]

Re: OFT let consumers down AGAIN on Overdraft Charges

I do remember having a tant once about OFT and it was said "Calm down nelly, they are all we've got".
Well it's a good job that isn't the case and we have sites like this and people that care.
I do hope something can be done and soon, there are more sharks out there waiting to jump on this band wagon and when they see that the authorities that are there to protect and aid the consumer have no bottle or clowt then it's another massacre for the under dog IMHO.
__________________

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

This is what Beagles and other groups asked for in the meeting at the beginning of Feb and in our subsequent report;

• There should be a universal cap on charges
• There should be a return to simple charging
• The Unauthorised Overdraft ''service'' should be Opt In - okay some progress possibly ??
• Real-time balances at ATMs, telephone banking, online and in branches - some progress - but this could be instant - the technology is there in place the banks chose not to use it because they wouldnt make so much in overdraft fees
  
• Two months advance notice of changes to charges
• Banks should publish data on the average amount paid per annum by account holders who incur overdraft charges what happened to the Seven Scenarios ???
• Each bank should offer at least one truly charge-free basic account to ALL customers that operates only when in credit
• Banks must offer small businesses the same level of protection on business accounts as are proposed for PCAs.
• Personal Current Accounts should be recognised as a utility and regulated as such.
• Charges incurred should be notified 28 days in advance. Our preference would be for charges to be ‘billed’ separately to customers much as other utility providers do.

So it may be a tiny weeny step in the right direction, but it is exceedingly wishy washy and weak and the Government need to step in NOW.

[EXC]

Re: OFT let consumers down AGAIN on Overdraft Charges

What can I tell you Nelly?

I spent 3 years courting these people, often alone in defending them on forums as I thought it was the right thing to do. I thought by building a relationship we could have an influence. I feel utterly let down now.

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

From the Q & A http://www.oft.gov.uk/shared_oft/per...ksqa160310.pdf

1. What have the banks committed to today?

The OFT has worked with the industry to agree a range of cross industry initiatives relating to unarranged overdraft charges (UOCs):

• the development of minimum standards to cover how consumers are offered the ability to opt out of unarranged overdraft facilities

• a new industry working group to explore ways to give consumers greater control and access to real-time information,
and
• a new working group of industry and consumer representatives that will develop best practice for PCA providers in dealing with customers in (or at significant risk of being in) financial difficulty who incur UOCs.


The major PCA providers have also agreed to:

• respect the principle that PCA customers will have the ability to choose whether or not to use new facilities if these facilities limit the customer's ability to control their use of unarranged
overdrafts,

• continue to work with the OFT to ensure that customers remain able to make meaningful comparisons between providers and manage their PCA by ensuring that the transparency initiatives
committed to in October 2009 remain relevant, and

• publish their policies for dealing with customers in financial difficulty who incur unarranged overdraft charges.

[EXC]

Re: OFT let consumers down AGAIN on Overdraft Charges

BBC News - Banks to offer opt-out from unauthorised overdrafts
------------------------------- merged -------------------------------
BBA statement to OFT report on bank charges


16/03/2010

Eric Leenders, Executive Director, Retail said:

"Retail banking is highly competitive and this competition for customers has resulted in some dramatic initiatives from banks, some of which have been highlighted by the OFT today.
"We are happy to continue to work with the Office of Fair Trading and others to ensure that it is simple for consumers to shop around and switch accounts to get the deal that is best for them.
"The enhancements planned to improve transparency on statement sheets and websites are positive examples of the further changes that will be made in the personal current account market in the months ahead.
"Banks are committed to ensuring customers understand how banking services work and that when the customer is charged a fee for a service, the charging structure is fully understood. We look forward to working with our members and the OFT to further enhance the services that banks offer."

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

The future.....

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

From the BBC report

'Weak' report
Overdraft fees are one of the biggest sources of income for High Street banks, and in 2006 generated £2.6bn for them.

After two and half years of litigation the banks won their test case with the OFT when the Supreme Court ruled in December that the OFT did not have the legal powers necessary to challenge the right of banks to charge overdraft fees as they saw fit.

Consumer groups who have been campaigning against "unfair" overdraft fees criticised the OFT's latest pronouncement.

"[We] are very surprised and extremely disappointed at the OFT's press release on bank charges which offers consumers no tangible protection against the imposition of unfair and extortionate charges," said consumer campaign group Legal Beagles.

"The Office of Fair Trading's report, following nearly three years of investigation into the personal current account market in the UK, is extremely weak and does nothing to improve confidence in the regulator or the banks."

Marc Gander of the Consumer Action Group said the OFT had "nothing to cheer about or to congratulate itself about".

"Despite its powers and its influence the OFT has achieved very little," he said.

"It has been defeated on the test case charges issue because it allowed itself to be corralled into dealing with a very narrow point of law and despite a very clear signal from the Supreme Court that there were another more realistic routes to make a challenge on behalf of bank customers, it has declined to do so."

Martin Lewis of Moneysavingexpert.com said: "This is a flaccid document and a complete waste of a chance to improve things for consumers.

"After three years all it's managed to do is set up yet another enquiry into best practice and told us it will monitor the banks for another two years, then maybe take action," he added.

[Luminol]

Re: OFT let consumers down AGAIN on Overdraft Charges

Im disgusted, they are a pointless organization, I honestly thought that after the test case, they would at least try to get some positive outcome for consumers and now we have to rely on the banks morale compasses to stop them continuing as before. I'm not holding my breath, apparantly its 'hug a banker' day everyday!

Lumi x

[righty]

Re: OFT let consumers down AGAIN on Overdraft Charges

What can I tell you Nelly?

I spent 3 years courting these people, often alone in defending them on forums as I thought it was the right thing to do. I thought by building a relationship we could have an influence. I feel utterly let down now.

I Know & one of those you defended them against was me when I said we are all being conned I was shot down & accused by a number of people (not just here but OTR also) of being a conspiracy fantasist

I spent a considerable part of my career working in the city & I know how they think. They truly believe, as did I once, that they are a race apart & we the peasants are mere cannon fodder

In the UK the consumer gets ripped off at every turn cars, petrol etc & governments do nothing about it

[Amethyst]

Re: OFT let consumers down AGAIN on Overdraft Charges

Once we have read it in full we will report further.

nope, nothing more to say.

Absolutely let down.

I'd like to know how the hell they worked out these figures tho

The average level of unpaid item charges levied by the major PCA
providers has fallen from approximately £34 in 2007 to £17 in 2010, and
per transaction paid item charges for using an unarranged overdraft from
approximately £30 to £22.

If the OFT agree with the Supreme Court (which they must do as they have run away from further litigation and left it to us) then the charges aren't per transaction at all...

A ‘Paid Referral Fee’ is charged when the Bank honours a cheque, standing order or direct debit in circumstances where the account is overdrawn without prior arrangement. The fee is not charged per transaction but at £30 per day. But the fee is only charged on a maximum of three days per month. A customer would not conclude that the fee was charged in exchange for the transaction or transactions concluded on the days when the charges were made but that any other similar transactions in the course of the month were provided free.

then how can

per transaction paid item charges for using an unarranged overdraft from
approximately £30 to £22.

be the case ?


btw although I think the OFT have done a crap job with this, I still don't subscibe to the conspiracy theories.

[enaid]

Re: OFT let consumers down AGAIN on Overdraft Charges

What can I tell you Nelly?

I spent 3 years courting these people, often alone in defending them on forums as I thought it was the right thing to do. I thought by building a relationship we could have an influence. I feel utterly let down now.

Well you would wouldn't you if you read and digest the opening lines on their web page.

'
<H1>About the Office of Fair Trading

The OFT is the UK's consumer and competition authority. Our mission is to make markets work well for consumers.


We pursue this goal by:

• encouraging businesses to comply with competition and consumer law and to improve their trading practices through self-regulation
• acting decisively to stop hardcore or flagrant offenders
• studying markets and recommending action where required
• empowering consumers with the knowledge and skills to make informed choices and get the best value from markets, and helping them resolve problems with suppliers through Consumer Direct.

The OFT is a non-ministerial government department established by statute in 1973.
</H1>