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OFT to target overdraft charges
07/03/2006 08:32:00
The Office of Fair Trading (OFT) is considering cutting the cost of being overdrawn.
Calling overdraft fees "an unfair penalty", the OFT is mulling over plans to limit or cut the charges.
An OFT spokesman told the Daily Mail: "We expect charges to be cost-reflective and not to cross subsidise other services and that applies to all bank charges."
It further argued that large overdraft penalties might be illegal if they did not reflect the true cost.
Attempts to tackle the problem of overdraft charges as high as £50 in some banks were headed in 2000 by former Stock Exchange chairman Don Cruickshank, but it is only now that action is likely.
Though there are many customers who can complain that they have been penalised in pounds for overdrawing by pence, the British Bankers' Association (BBA) defended the charges.
"Our members stand by the fact that the charges levied reflect the cost of collection for accounts that have defaulted," the association told the newspaper.
The BBA argued that terms should be borne by those who "step outside their terms and conditions" which were "clearly stated".
Though not arguing that the terms were hidden on high overdraft fees, the OFT said that it was considering its options "to carry out negotiations or to litigate" against the banks.
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