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UK banks have won their appeal at the supreme court over the matter of unfair bank overdraft charges.
David Buick, market analyst with inter-dealer brokers, BGC Partners was interviewed on BBC radio this morning following news of the judgement. Whilst he did not argue against the accusation that the banks precipitated the recession he took the view that in the current economic situation a ruling against the banks would have been an administrative and financial nightmare and took the view that the era of easy credit pointed the hand of blame at all of us. He also forecast more draconian overdraft terms in the future.
Of course were the banks not in the financial pickle that they’re currently in then we might have seen a different judgement. Clearly having averted a worldwide banking collapse would not be helped (in our capitalist system anyway) by the legal requirement to then manage a deluge of charge reclaims by numerous individual bank account holders.
That’s not to say that the judgement is correct. The argument is whether the Office of fair trading really has the powers to regulate effectively. The supreme court clearly indicates that it feels it is not in the OFT’s remit to have brought this action and points out that this decision is not a judgement is not about whether overdraft charges were fair but that the OFT cannot and should not have instigated this action on behalf of consumers. That perhaps is an argument for regulators with real teeth rather than having quangos of consumer rights tokenism.
It’s worth pointing out that if the ruling had gone against the banks then they would have taken their case to the European court
Can the consumer ever really win? In Australian credit card hidden charges were regulated against but all that happened was that the credit card companies were able to tack on a raft of new charges with fees that exceeded the old hidden charge fees. Better the devil you know?
The same may have also applied to a ruling against the banks with the probable introduction of a monthly account charge for all account holders. Maybe in future the privilege of having an overdraft will incur a fixed monthly fee whether you used that facility or not.
Martin Lewis the consumer champion who pioneered the reclaiming of excessive bank charges may well have more to say on this subject.
The full supreme court judgement is available here (PDF)