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137/09 25 November 2009
The OFT is disappointed by today's Supreme Court judgment, which overturns previous High Court and Court of Appeal rulings that unarranged overdraft charging terms can be assessed in full for fairness. It will also be disappointing for many consumers.
The OFT will now consider the detail of this judgment before it makes a decision on whether or not to continue its investigation into unarranged overdraft charging terms. It will also explore with others the implications for consumers and for existing and future legislation and regulation. The OFT expects to make a further announcement in December.
The OFT set out its concerns in relation to unarranged overdraft charges as part of its 2008 market study. This found that banks earn around a third of their personal current account revenues from unarranged overdraft charges that are difficult to understand, not transparent, and not subject to effective consumer control.
The OFT will be seeking discussions with banks, consumer organisations, the FSA and the Government in the light of this judgment.
1. A copy of the Supreme Court judgment is available on the Supreme Court website at: www.supremecourt.gov.uk/news/judgments.html.
2. The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) are designed to protect consumers against unfair standard terms in contracts they make with traders. The Office of Fair Trading, together with certain other bodies, can take legal action to prevent the use of such terms.
3. The other parties to the test case are Abbey National plc, Barclays Bank plc, Clydesdale Bank plc, HSBC Bank plc, Lloyds Banking Group plc, Royal Bank of Scotland Group plc and Nationwide Building Society. Together these current account providers account for about 90 per cent of personal current accounts in the UK.
4. Read more information about the OFT's investigation into unarranged overdraft charges.
5. Read 'Personal current accounts in the UK - an OFT market study', along with the follow-up report of October 2009.
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