Banking sector looking at UK courts

Banking sector looking at UK courts

15 January 2008

The Australian banking sector will have more than a passing interest on the happenings in the UK law courts this week as the Office of Fair Trading takes on Britain's high-street banks to determine if the fees they charge for overdrafts are unfair.

With Australian law based on UK law, the results of this "test case" could have a major impact on the banking sector here in Australia. If the ruling is in favour of consumers then you can expect to be charged "other bank fees" whether you have normal everyday bank accounts online or a cheque or savings account.

Speaking on the BBC2's Money Programme, John Fingleton, chief executive of the Office of Fair Trading said, "What we hope to achieve, is a very fundamental change in the behaviour of banks. We want them to treat customers well, no tricks, no hidden extras, and to ensure that the pricing is fair and simple to understand."

"At the moment that's not the case. They don't see what they pay and very often they pay when an unexpected event happens."

"Banking customers currently pay for their banking through surprises and through stealth."

The OFT believes that the fees associated with an overdrawn account are unfair and unreasonable. They are not an accurate reflection of the costs incurred by the financial institution.

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