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OFT Strikes First Blow in Unfair Charges Case
(30-01-08) - The Office of Fair Trading (OFT) have begun their case against the validity of overdraft charges by claiming banks use ‘a strange language’ to pretend their charges are fair.
Brian Doctor QC, acting on behalf of the OFT, addressed the court on the eighth day of this key test case, and highlighted written areas of banking contracts where the language and style does not reflect ‘objective reality’.
Mr Doctor crystallised his findings in the following statement:
‘We are entering a strange world in which the banks speak a strange language, in which customers are deemed to have done one thing by doing another. These (overdraft) charges are not prices in ordinary language, they are not services as normally understood’
He continued:
‘The charges are not in exchange for the services offered.’
The seven banks and one building society (Nationwide) maintain their charges are levied in return for a service, the provision of which is fundamental to the operation of current accounts, and therefore the regulations are not relevant.
With the case only hours old, the banks’ QCs put forward the suggestion that bank overdraft charges were akin to charges for ‘night clubs, hotel rooms, builders, shoe shops, mobile phones, car salesmen and university admissions.’ Mr Doctor chastised this harangue by claiming that there are no analogies or equivalents for bank overdraft charges.
Although originally scheduled for eight days, and due to be concluded yesterday, the hearing continues and is now expected to last until at least the end of next week.
Chris Eagle, Commercial Manager at CreditChoices, finds it hard to pick a winner at this stage:
‘This case is finely balanced, with both sides presenting well. The OFT’s target is to convince the court that bank overdraft charges are kept aside as a peripheral part of the contract, and covered up with confusing language. The banks will bite back though, and it’s their turn to answer these claims of deceptive language next.’
