Banks let off without OFT action

• News
• Published: 22 Dec 2009 in Money and Current Accounts

Banks have escaped further action by the Office of Fair Trading (OFT) over unauthorised overdraft charges but the watchdog has said it still has "significant concerns" about the personal current account market.

The OFT's decision comes after the Supreme Court ruled that unauthorised overdraft charges do not come under its remit, which will disappoint people wanting to claim back charges.

But "fundamental changes" were still necessary according to the OFT to make sure that the banking market meets customers " best interests". In order to achieve this, options from voluntary measures to legislative change will be discussed with consumer groups and banks.

The OFT said any investigation into the fairness of bank overdraft charges would have "very limited scope and low prospects of success" in light of last month's Supreme Court ruling that the charges do not come within its regulation under unfair contract rules.

In a statement the watchdog said: "The OFT nevertheless continues to have significant concerns about the operation of the market for personal current accounts.

"Despite some recent and planned improvements by banks, particularly around transparency and customer switching, it believes fundamental changes are still required for the market to work in the best interests of bank customers.

"The OFT said banks earn around a third of personal current account revenues from unarranged overdraft charges "that are difficult to understand, not transparent and not subject to effective consumer control".