Bank charges escape OFT scrutiny

Following on from its court defeat last year over unfair bank charges, the Office of Fair Trading (OFT) intends to gloss over the matter of overdraft charges altogether in an upcoming report.

Due next month, the report is expected to be highly critical of payday loans, pawnbroking and other high-cost forms of credit, but the Daily Mail claims that bank charges will barely be touched upon.

In November, the Supreme Court ruled that the OFT had no power to rule on complaints about banks and overdraft charges.

British Cheque and Credit Association condemned the omission, arguing that overdrafts that incur charges are just another form of short term credit, and yet they are escaping scrutiny.

Unlike other kinds of credit, which have to advertise the annual percentage rate of interest charged, bank overdrafts are allowed to be publicised with an "equivalent annual rate" which excludes charges.

EuroDebt director Vance Parsons says: "Whilst high-cost forms of credit are a major concern for us with vulnerable clients who get into a debt spiral, we also look at the fees incurred through bank charges. We offer a pre-paid current account for just this purpose with a flat monthly fee of £12.50 and no additional charges for failed payments. Transferring direct debits and standing orders is really easy and there are no credit checks."

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