Customers call OFT's bank proposals 'weak'

THE Office of Fair Trading yesterday concluded its study of the current account market with proposals that were dismissed by consumer groups as inadequate and weak.

The watchdog said the banking industry had agreed to make changes to unarranged overdrafts over the next two years, following its 2008 study that identified problems in the market.

It added that it expected banks to make it easier for customers to "opt out" of unarranged overdraft facilities and to improve their handling of customers who do go overdrawn and get into financial difficulty.

The OFT said that since its study of the current account market began in 2007, average unauthorised overdraft charges had dropped from 30 to 22, despite the failure of a test case in which the OFT sought to clarify the fairness of the charges.

Eric Leenders, retail executive director at the British Bankers' Association, said: "Banks are committed to ensuring customers understand how banking services work and that when the customer is charged a fee for a service, the charging structure is fully understood."

But Adam Phillips, chairman of the Financial Services Consumer Panel, said: "The OFT's response today is weak. If the OFT's proposals do not work, it must deliver on its commitment to make further intervention in the market, including legislation."