Protests grow over overdraft fees

Going into overdraft without permission leads to charges

Campaigners have protested outside the headquarters of the Office of Fair Trading (OFT) on Friday calling for an urgent review of bank charges.

Members of the Consumer Action Group pressed for banks to cut the fees they impose on customers who go overdrawn without permission.

They claim the fees break consumer law as they are a penalty, rather than a reflection of the true overdraft costs.

In May, the OFT ruled that similar credit card charges had to be cut.

Banks' dismay

We do not want a two-year investigation into this market, we want action now Dave Smith, Consumer Action Group

The OFT worked on the principle that credit card default charges should only reflect company costs.

To the dismay of banks, the OFT added that this principle would apply to default charges on overdrafts, store cards and mortgage products.

In September, the OFT followed this up by saying it would investigate whether unauthorised overdraft fees cover company costs.

Meanwhile, egged on by consumer groups, an increasing number of people have been taking banks to the small claims court in a bid to get their charges refunded.

But as far as the consumer groups that took part in the demonstration are concerned, the OFT's investigation is a retrograde step.

"We do not want a two-year investigation into this market, we want action now," Consumer Action Group spokesman Dave Smith told BBC News.

"When the OFT came out with its decision on credit card fees, it said that the same principle applied to overdraft fees. However, the banks have lobbied hard and got the whole thing tied up in a long investigation.

"Banks are making large amounts of money by imposing fees on many of UK's most vulnerable consumers," Mr Smith added.

In response, banking groups have said that unauthorised overdraft fees are a charge for a service - and that in some European countries, it is illegal for customers to go into the red without their bank's permission.