The Guardian - Formal investigation launched into bank charges
Britain's main financial watchdogs have backed away from imposing restrictions on current account charges and the sale of controversial payment protection insurance after a campaign of sustained lobbying by high street banks.
The Office of Fair Trading said it was unable to follow the advice of consumer groups that have argued for a cap on current account charges without an in-depth review. The watchdog said a review was needed after an initial study found "the banking industry is not straightforward and that a more detailed examination is needed".
Consumer groups said the decision left millions of bank customers in the dark about charges levied for overdrafts, bounced cheques and direct debits and would force them to pay billions of pounds in excessive fees before the review is completed.
This is Money - Q&A: What next for bank charges?
The story so far
Last year, after an investigation into the industry, the OFT imposed a £12 cap on credit card default charges and said the principle had a 'read across' to current accounts.
In September the OFT announced that it would be formally investigating the penalty charges being imposed on current accounts and it would make an announcement in March or April 2007.
Yesterday, it admitted it needed more time to thoroughly investigate the issues and a wider study was needed. The OFT says it will announce at the end of April the scope of the wider investigation. A definitive response, including how much it thinks banks can charge to deal with defaults, will be given at the end of the year.
Can I still reclaim charges?
Absolutely. The move has caused some confusion among consumers but for those who have lots of charges to reclaim, this will give you a bit more time to do it with the least possible hassle. And even once the OFT has made a decision, it won't be binding until it is made law, so even then you will probably be able to continue reclaiming for some time afterwards.
The Times - New probe into bank charges
OFT to initiate a full-scale investigation saying it has "real concerns" over level and frequency of bank charges
The Office of Fair Trading (OFT) said today that it would be mounting an in-depth study of bank charges on current accounts after a five-month investigation determined that there were issues of "real concern" to customers.
The OFT revealed in September that it was to carry out a "short preliminary study" into current account bank charges, usually imposed when customers go beyond their overdraft limits.
The Guardian - OFT targets current account fees
A widely expected crackdown on the level of current account overdraft charges has been put on hold while banks and building societies are subjected to further scrutiny, it was announced today.
The Office of Fair Trading (OFT) had been expected to publish the results of its initial review of bank fees shortly, and was predicted to recommend a maximum level for the charges.
However, it said today that although it shares consumers' concerns about the level of fees, a flat cap on them would be impossible because of the different ways banks and building societies run accounts.
Instead detailed investigation was needed to work out how charges could be made fairer without account providers simply adding new fees elsewhere, the OFT said.
Emma Bandey, personal finance campaigner at the consumer group Which?, said it was right that the OFT investigate pricing across the board.
Ms Bandey said customers who had paid bank charges should act now to reclaim them, rather than waiting for the OFT's final report.
Daily Mail - OFT inquiry 'could spell the end of free banking'
High Street banks which make millions of pounds of profits from current accounts today faced a fullscale probe from consumer watchdog, the Office of Fair Trading.
The watchdog's growing interest could spell the end of free current account banking in the UK if it concludes too many charges are too high.
The study sits alongside an investigation into the fairness of current account charges announced last autumn and follows specific probes into credit card and overdraft charges.
BBC - OFT Study launched into bank charges
After six months of an informal scrutiny of current account charges the OFT has decided that a much bigger investigation is needed.
The informal study had been widely expected to conclude that bank current account fees are too high.
But the OFT wants to make sure that if such charges are reduced they do not just lead to higher charges elsewhere.
'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'
said the OFT's chief executive John Fingleton.
This is Money - Changes afoot for bank charges
Four million bank customers could miss out on refunds of up to £2bn if regulators put a cap on penalty charges.
Campaign groups, lawyers and the Financial Ombudsman Service are concerned that should the Office of Fair Trading demand banks put a cap on fees when customers accidentally go overdrawn, then the amount of refunds for existing overcharging will be slashed proportionately.
The OFT is investigating charges banks impose for going into the red, and for authorising or bouncing a direct debit, standing order or card payment.
Campaigners argue that the charges, which can be as much as £39, are unlawful because they do not reflect the cost of administering the overdraft, and are therefore a penalty. They fear that instead of handing out full refunds for charges, banks could start refunding the difference between the old fee and a new capped fee, which could be around £12.
Marc Gander, founder of campaign website Consumeractiongroup.co.uk, acknowledges that credit card companies had started to offer reduced payouts. He says:
'Don't accept it. You should demand a full refund anyway. It is all just part of their games. We will encourage our users to press on with all their demands for a full bank refund regardless of any cap. That is what they are entitled to.'
The Times - Bank customers ‘too scared’ to seek refund
ONE in five of bank customers hit by “unfair” penalty charges say they are too scared to claim their money back because of banks’ bully-boy tactics, but consumer groups say you should not let it put you off.
Institutions such as Alliance & Leicester and Lloyds TSB have threatened to close claimants’ accounts once they have reclaimed their money and others use frustrating delaying tactics. A quarter of people who have lodged claims found their bank had been unhelpful and unresponsive, while a further third had to chase their bank for a response, according to the consumer lobbyist Which?
Emma Bandey at Which? said:
“Claiming back unfair bank charges is a simple process. If your bank does not cooperate, you should refer the case to the Financial Ombudsman Service: so far the banks have chosen to settle all cases referred to the FOS.”
BBC - Success for Bank Charge Claimants
Most people who try to reclaim bank account penalty charges get some money back, a study has found.
A survey for the consumers' association Which? suggests that 85% of people who have demanded a refund have been at least partly successful.
However, only a third of people who believe they may have been overcharged have asked for money to be repaid.
The Which? survey of 2,228 adults found that some were scared of their bank's reaction if they asked for a refund.
"Claiming back unfair bank charges is a simple process that won't take up hours of your time," said Emma Bandey of Which?
"If your bank does not co-operate, you should refer the case to the Financial Ombudsman Service (FOS) as so far the banks have chosen to settle all cases referred to FOS," she added.
The Guardian - Consumers successfully reclaim bank charges
The majority of people who have taken on their bank over unfair overdraft charges have managed to get at least some of their cash refunded, the consumer group Which? said today.
In a survey of 2,200 people, 85% of those who had made a claim against their bank had won a payout equal to some or all of the money they had handed over in penalty payments for going overdrawn.
Which? said that if people who were initially turned down by their bank had persisted, this figure could be closer to 100%.
However, it also said people were still accepting charges without complaint, with two-thirds of those questioned saying they had yet to reclaim their money.
