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Last Updated: Thursday, 29 March 2007, 11:08 GMT 12:08 UK
Study launched into bank charges
Bank customers at an ATM
The OFT wants to know how much customers should be charged
A formal investigation into the level of bank charges is being launched by the Office of Fair Trading (OFT).

After six months of an informal scrutiny of current account charges the OFT has decided that a much bigger investigation is needed.

The informal study had been widely expected to conclude that bank current account fees are too high.

But the OFT wants to make sure that if such charges are reduced they do not just lead to higher charges elsewhere.

"A quick-fix solution is not the answer as this might be of limited long-term benefit and could have unintended and far-reaching consequences across the whole sector and on consumers as a whole," said the OFT's chief executive John Fingleton.


In the past few months hundreds of thousands of people have been complaining to their banks that they have been unlawfully overcharged for going overdrawn on their current accounts and having their cheques bounced.

The issue of bank current account charges is a matter of real concern to the banks' customers
John Fingleton, OFT chief executive

Although the banks deny that their fees are unlawful, in many cases they have been offering full or partial refunds before the issue gets to court.

The OFT has been partly responsible for these widespread customer protests because last year it decreed that banks should cut their credit card default charges to 12 if they wished to avoid formal investigation.

At the time it said that the same approach might also apply to bank current accounts as well.

"We agree it's crucial the OFT investigates retail bank pricing," commented the consumers' organisation Which?

"But today's announcement still leaves people in the dark about unfair bank charges."


The OFT said that after its first, initial, review of bank current account charges, which it started last September, it now shares the worries of customers that they may be being charged too much.

But it feels that the issue of just how much people should pay for their banking services is too complicated to be addressed by a simple change along the lines of its ruling on credit card fees.

"The issue of bank current account charges is a matter of real concern to the banks' customers, and raises wider questions about competition and transparency of pricing," said Mr Fingleton.

"The initial scoping work we have undertaken has demonstrated to us that this is not only an issue for those people who are being charged, but also for customers who are not defaulting on their bank accounts," he added.

In other words, if banks lose income by being forced to reduce their overdraft charges then they may recoup the money by putting up charges for customers who currently do not pay anything at all.

Full details of the new, wider, study will be announced in late April and the investigation's results should be available by the end of the year.

A bank customer explains why he challenged the charges

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