The Governments Response

[phatram]

To my petition,

 

The setting of charges and their application is a commercial decision for each individual bank. However, we would stress that this is an issue the Government takes seriously, and on which it has already taken action.

In 2004, the Chancellor asked the Office of Fair Trading (OFT) to establish a Payments Systems Taskforce, made up of industry, business and consumer representatives. As a result of the work of this body, banks have delivered concrete results on faster electronic payments and cheques. This will benefit consumers and businesses, reducing the uncertainty around clearing times that may cause people to unintentionally exceed their overdraft limit and incur a penalty charge.

With specific regard to high default charges, the OFT investigated credit card default charges. As a result of this investigation, the OFT wrote to leading banks in 2005 and said that the bank's credit card default charges were excessive, challenging their fairness based on existing rules set out in the 'Unfair Terms in Consumer Contacts Regulations 1999'. The OFT issued a further statement on this issue, recognising that the principles of fairness and transparency which it has applied to credit card default charges were likely to be applicable to bank account default charges, such as those applied to overdrafts. As a result of a fact-finding exercise, the OFT announced on 29th March 2007 that it would carry out a further in-depth study of retail bank pricing to sit alongside the formal investigation into the fairness of bank account default charges. The full details of this study were announced by the OFT on 26th April 2007. This approach reflects the OFT's desire to take a strategic approach to the examination of the fairness of these charges in the wider context of competition in the UK retail banking sector.

It would not be appropriate for Government to influence the outcome of an investigation by the Office of Fair Trading, which is an independent body. However, the Government strongly supports the principles of fairness and transparency which the OFT is applying.

 

 

Many thanks to all who signed it.

Phatram

[indebtstudent]

In other words we're going to continue to stick our heads in the sand and if the OFT hadn't stumbled across this anomaly it would still be going on...