OFT vs Unauthorised Overdraft Charges

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More and more people are contacting The Office of Fair Trading regarding what they believe to be unauthorised bank charges.

Chief ombudsman Walter Merricks said:

We have seen sharp increases. A year ago we were receiving just ten cases a week about banking charges, by the end of March 2007 this had risen to 500 a week, and we’re now handling 1,000 of these cases weekly

calculatorCurrent account providers have so far refunded disputed overdraft charges on a voluntary “goodwill” basis, which means the ombudsman have never reached the stage of being able to perform a detailed investigation, therefore the Office of Fair Trading and a number of banks have agreed to take a test case to the High Court to enable a full, detailed investigation of unauthorised overdraft charges.

In light of this agreement, the ombudsman service have confirmed that they will suspend acting on complaints regarding unauthorised overdraft charges until the High Court settles key questions about the charges.

Tony Boorman, principal ombudsman, said:

This year the ombudsman service has been dealing with tens of thousands of enquiries and complaints about bank charges and county courts across the UK have similarly been coping with significant volumes of bank charge claims

It is in the interest of everyone involved, consumers with current accounts, the courts, the banks and other current account providers that the High Court test case should settle the legal uncertainties relating to the level, fairness and lawfulness of unauthorised charges.

Until the High Court have made decisions on the legal issues involved regarding the “test case”, the Financial Services Authority (FSA) have announced that banks and other current account providers can also put cases on hold pending the outcome.

The decision for the Ombudsman service to put on hold acting on complaints made, this does not affect consumers ability to bring forward complaints regarding other bank related issues, including financial difficulty and hardship.