Charges test case goes against OFT

The Office of Fair Trading (OFT) has failed in its attempt to confirm its legal right to adjudicate on the fairness of bank charges.

It brought the case after the controversy erupted over the size of penalties being imposed by financial institutions on customers – many of whom may have debt management issues – for minor misdemeanours such as exceeding overdraft limits and bounced cheques.

The Supreme Court ruled that while the OFT does have the right to adjudicate on the fairness of charges in consumer contracts, this deals with “core” and not “ancillary” features, with the exceeding of overdraft limits being an example of the latter.

Such a situation means the banks retain the right to set charges at whatever level they wish.

Reflecting on the news, the Consumer Credit Counselling Service said it hoped the “uncertainty” over the issue will now be dispelled.

But chairman of the body Malcolm Hurlston hit out at the banks, arguing: “It is a scandal that the costs of banking fall unfairly on people in debt.”

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