UK Banks Win Overdraft Rulng

UK banks win overdraft ruling The UK court battle between the Office of Fair Trading (OFT) and the country's major banks regarding overdraft fees has resulted in a ruling in favour of the banks. The UK's Supreme Court found that the legal basis of the OFT's action could not be applied to overdraft penalty charges. The OFT had brought legal action against the banks, arguing that the charges amounted to a breach of the laws on consumer contracts. The Supreme Court, however, ruled that the charges were part of the cost of having a current account and that the legal argument of unfair contract terms did not apply. The ruling overturned the previous judgments of the High Court and the Court of Appeal that overdraft charges could be applied to laws on unfair contracts. If the OFT is to pursue legal action against the banks, it will have to find different laws to argue its case. The OFT is expected to make an announcement in December 2009 about the next stage of its action against overdraft fees. The British Bankers Association said in a statement: "We recognise that this issue has been of real concern to a large number of our customers, and we are pleased that this decision now brings clarity for all parties. The banks will work with the regulators to ensure that the outstanding customer complaints are brought to a swift conclusion. We will also continue to work together with the OFT in connection with its on-going market study." Issue: 2009/26 Date: 26 Nov 2009

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