---

(For more future updates, kindly subscribe to this blog's feeds via RSS reader or via e-mail.)

The consumers association Which? has claimed that Banks are still finding ‘sneaky ways’ to make money out of people and that the rate on authorised overdrafts is at its highest level since records began in the mid-1990s.

According to the latest Bank of England statistics, the average overdraft rate is 18.96%, although many of the big banks can charge considerably more.

Which? says that the rate for unauthorised overdrafts has fallen owing to a major court case.
But it then accused banks of raising the rate on authorised overdrafts to make up the difference.

Many banks have reduced the rates on unauthorised overdrafts. On 1 October, the Royal Bank of Scotland cut its charges. On 1 December, the Halifax will restructure the way it charges customers, which will benefit some people with an overdraft.

In relation to high rates on authorised overdrafts, the industry argues that its own costs remain stubbornly high. The British Bankers’ Association (BBA), which represents the banks, is reminding everyone that the cost of borrowing no longer tracks the Bank rate as it once did.

Instead banks have to borrow money on the more expensive wholesale market. The risk of borrowers defaulting is also higher than it was. There is some truth in this in that we know that the cost that the banks have to pay for the money they buy in has increased.

After more than two years of court cases, and appeals by the banks, the Supreme Court will make a significant ruling about bank charges on Wednesday. At stake are billions of pounds, and complaints from nearly a million bank customers in the UK.

The court is due to decide whether the Office of Fair Trading (OFT) has the right to determine what is, and what is not, a fair bank charge.

If the OFT wins the case, it is due to announce its findings at the beginning of next year.
In theory, the way could then be open for customers to have their charges refunded.

But if the banks follow their track record to date, they are likely to appeal against any ruling made by the OFT. That could mean a whole new round of legal action, lasting for years.

One government source has claimed that the case might therefore continue until 2015 or so.

This entry was posted on Monday, November 23rd, 2009 at 8:06 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.