The Great Debate UK
-David Kuo is director at the Motley Fool. The opinions expressed are his own.-
Banks insist on the right to charge customers who go overdrawn on their current accounts. They also say they have a right to set the amount charged.
The Office of Fair Trading (OFT), on the other hand, claims that the fees banks levy on customers who exceed agreed overdraft limits are unfair. This is according to their interpretation of the Unfair Terms in Consumer Contract Regulations.
The ding-dong battle has been going on for years. Round One, which was heard in the High Court, went to the OFT. Round Two in the Appeal Court went to the OFT too. Round Three is being heard in the House of Lords.
The stakes are high. Collectively, banks that include Lloyds Banking Group and Royal Bank of Scotland stand to lose almost 2.5 billion pounds in revenues every year if they aren‚t allowed to charge customers up to 40 pounds a time for going overdrawn without permission. Additionally, banks will have to refund customers who have been wrongly charged in the past if they lose.