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Economy

Banks slammed over appeal

Written by Paul Williams
Monday, 27 October 2008
Charges test case between the OFT and the UK’s leading high street banks to recommence tomorrow. Tomorrow will again see the UKs major high street banks facing off against the Office for Fair Trading (OFT) in a test case over bank charges. Related Articles Former Lloyds TSB exec appointed at SAV Credit Equifax: half of Premiership Clubs insolvent Grim outlook for Irish business Morning business news: 19 December Egg fine welcomed by Which? Peter Vicary-Smith Chief Executive of comparison site Which? says: “It’s extremely disappointing that instead of looking for ways to make their customers’ lives easier during these difficult times, the banks are piling on the misery by continuing to hit them with unfairly high unauthorised overdraft fees. It is argued by Vicary-Smith that the banks should not be appealing the High Court's decision - rather they should be working with the OFT to establish what constitutes a fair unauthorised overdraft charge and starting the process of refunding the customers they have been overcharging for years. Currently customers can successfully argue against overdraft charges, but banks are still allowed to impose the charges. Passing on mortgage benefits It has also been revealed today by the Times that the benefits of the interest rate cut by the Bank of England is starting to be seen by consumers. More than two weeks after the Bank of England cut base rates by 0.5%, mortgage lenders are slowly beginning to pass on the reduction to their consumers. According to the Times, Royal Bank of Scotland and Abbey have both cut interest rates on some of their fixed rate deals, bringing relief to overstretched homeowners. Credit conditions remain tight and lenders are still demanding large deposits from new buyers, but the reductions may signal a shift in the sector. Indeed, those seeking secured loans may soon be able to find cheaper deals if other lenders follow suit and slash their borrowing costs. According to the Bank of England's latest credit conditions survey, the third quarter of this year saw a larger-than-expected reduction in the availability of secured credit to households. The report stated that expectations of falling house prices coupled with wider concerns about the UK economy were a contributing factor.