Ten Banks Accused Of Misleading Customers by Finance News Bulletin

Published: 21/11/07

First, The Office of Fair Trading (OFT) launched a maintain against eight banking groups (ten banks in sum about their charges (Read What's Happening With Bank Charges for the backdrop) The banks responded with a defence and a counterclaim

Now, the OFT has fought back with a defence to the counterclaim It may noise like guerilla warfare, but actually it's a huge fight over billions of pounds-worth of chargesThis huge case is really just a much bigger account of the small claims that individuals have been taking to courtyard The OFT has its reputation at stake, and it is a influential organisation -- when it chooses to wield its powers fully

The banks are rich and are by vast sums in their defence For these reasons, this case won't be straightforward, in spite of of the truth of bank chargesI haven't read the claim or the counterclaim In my sight, there's little point reviewing every document involved, as in the end it's down to what the moderator thinks

However, having read through the OFT's reply and defence to the counterclaim, I consider I have sufficient in order to summarise its main points The OFT is arguing that:Either the charges are a punishment for breach of contract or they are charges for a repair (The OFT is allowed to quarrel both possibilities) In either case, the OFT will argue the dimension of the charges are too far above the ground under the consumer laws that regard standard, pre-written contracts

There are no terms in the current-account contracts that give details the order in which banks process dealings (Usually, if, on the same day, a payment is due to go away your account and some money is due to be credited to it, banks make the sum before adding the credit This can temporarily shove people over their overdraft limit)The terms don't make it clear enough that anyone paying for goods when they don't have the cash risks committing a criminal offence

(It's not in the banks' best interests to create this clear; the more comfortable people are with more than their overdraft limits, the more profit the banks create)I also gather from the document that the OFT is still investigating how much it costs banks when someone exceeds their overdraft boundary, bounces a cheque, or similar To effort to establish this, the OFT will require information from the banks, so, hopefully, they won't be able to stall for too long, as the first hearing is pencilled in to take put some time in JanuaryThe OFT also points out that many banks have tidied up their conditions and conditions in the past few months

The new wording better supports the banks' influence, but the OFT properly claims that the language may be different, but the charges have not significantly changedSo they haven't missed this trick, but we can expect a lot more from the banks Let's hope the OFT's lawful team is up to scratchcountrywide is one of the ten banks (OK, banks and building societies then

) that is being taken to courtyard in this super maintain (The others are Abbey, Barclays, Clydesdale, Halifax, store of Scotland, HSBC, Lloyds, Royal store of Scotland and NatWest)The many Fools who are countrywide fans will be pleased to know that, whilst the OFT believes the building civilization is mostly 'guilty' of the same things as the other banks, in some areas the OFT's defence to the counterclaim specifically says that Nationwide is not guilty, chiefly when it comes to how clearly the terms and circumstances are expressed in its current-account contractsMany banks tinkered with their charges recently

It appears that the banks are in conflict that the changes will in fact make it cheaper for many However, they acknowledge that it'll be more expensive for others So, what we've got here is even greater sentence for the people who can least afford itFurthermore, however they alter their T&Cs, they're still unlawfully grueling the poorest people to fund free banking for those who are more rich

I don't want to pay for my current explanation any more than other Fools, but I'd much rather we all get charged a modest fee than the poorest populace are forced to pay thousands each in illegal penalties just to support us morally and legally it is not correct

There, I said it© Copycorrect 1998-2007, The assorted Fool Limited All rights reserved This material is for personal use only

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