Treating Customers Unfairly

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by: MarkeD
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Word Count: 671
Date: Sun, 25 Apr 2010 Time: 12:53 AM
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Ever feel like nothing ever gets done? I got that very feeling yesterday when an email dropped into my inbox from the Office of Fair Trading (OFT). Now, I get quite a few of these; usually something nondescript like today's thriller - "OFT asks European Commission to investigate Procter & Gamble air freshener acquisition". Was that as interesting as it sounds? I'll never know, because I deleted it immediately.

But I digress - yesterday's email was a significant one; not that you'd realise it at first. It was a press release outlining the OFT's final report on retail banking - grazing (and I choose that word carefully) upon the controversial subject of overdraft fees.

Now, for anyone with a bit of an interest in personal finance, or indeed anyone with a bank account, this is something that we have all been waiting quite a long time for. Before I get to what it contained, let me give you a potted history of the bank charges saga:

Timeline of treating customers unfairly

2005: Several banks raise their charges for unauthorised overdrafts by around 50 per cent over the year, meaning that you can be charged as much as £38 for going 10p over your overdraft. Unsurprisingly, people get angry.
2006-2007: Complaints begin to gain in pace after widespread media coverage. Many receive full refunds of their charges, and banks largely cower in fear.

July 2007 - As claims against banks begin to overwhelm the courts, the Office of Fair Trading steps in with its own case to clarify whether the charges are fair.

November 2009 - After three defeats against the OFT in the High Court, the banks finally gain a shock victory at the Supreme Court. Hope is given that an appeal can be made under different rules.

December 2009 - The OFT decides against making another challenge, and instead says it will publish a detailed report in March 2010 after discussing with a variety of parties.

Which brings us up to this week, when the long-awaited report was finally released. If you don't already know the outcome, I apologise for having built this up quite so much - in truth it was little more than a token gesture and, frankly, calling it a total cop-out might be more pertinent.

Included are no fixed rules preventing banks from profiteering through unfair charges, and instead, it seems that the powers that be have effectively allowed the sector to, once again, regulate itself. Because, of course, it worked so well last time.

Giving up on consumers

The most disappointing thing about all of this is that it now feels like even an official body designed to protect consumers has given up, er, protecting consumers in the face of the stubborn, profit-hungry banking industry.

The Treasury have indicated that they would be willing to legislate if banks failed to follow the OFT's flimsy recommendations, but, as they refuse to put a cap on charges, this is likely to be just a recycling of the same hot air that has been spouted on numerous occasions over the last two years.

In truth, it's likely that banks will reduce their charges for competition's sake, but that doesn't mean consumers won't be pinched elsewhere. It only took two hours after the OFT's soggy announcement for HSBC to launch a new account with strictly no unarranged overdrafts - at the princely sum of £15 a month.

If the thunder doesn't get you, the lightning will. You could be forgiven for thinking this is pretty depressing stuff, and for that I apologise; but bear with me for one quick rallying cry. Just because the OFT and the government look impotent in the face of a challenge with the banking sector, there's no reason why we should. So, the question I want to ask is this; do you think this is an issue that needs resurrecting?

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