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OFT launches wider study into bank charges

Watchdog warns 'quick fix’ could harm consumers

Cascading pound coins.

A much anticipated crackdown on bank charges has been delayed after the government announced an in-depth study into the issue.

The Office of Fair Trading (OFT) had been expected to deliver its verdict on current account fees .

But it’s now widening the scope of its initial investigation to avoid making a ‘quick fix’ that could disadvantage consumers.

A new in-depth study will be launched alongside the formal investigation, with the results expected at the end of the year.

The OFT said that after its initial probe it shared the ‘public concern about the level and incidence of bank current account charges.’

Current account

But the regulator admitted that the application of general principles it set out last year – when it told credit card firms to slash the amount they charge in penalty fees – was not straightforward and needed detailed examination.

John Fingleton, Chief Executive of the OFT, said: ‘The issue of bank current account charges is a matter of real concern to the banks’ customers, and raises wider questions about competition and transparency of pricing.

‘The initial scoping work we have undertaken has demonstrated to us that this is not only an issue for those people who are being charged, but also for customers who are not defaulting on their bank accounts.’

He added: ‘A quick-fix solution is not the answer as this might be of limited long-term benefit and could have unintended and far-reaching consequences across the whole sector and on consumers as a whole.’

‘Unfair charges’

Which? personal finance campaigner Emma Bandey said: ‘We agree it’s crucial the OFT investigates retail bank pricing. But today’s announcement still leaves people in the dark about unfair bank charges.

‘Before the end of the year consumers could be charged up to £3.5 billion by their banks in unauthorised overdraft charges. Don’t be put off claiming back your charges while the OFT’s looking into this – claim them back now.’

 Anyone who thinks they have been unfairly charged by their bank for going overdrawn in the last six years can access easy-to-use resources on our bank charges site, including a step-by-step guide to reclaiming and downloadable template letters to send to their bank.

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