Heads I win, tails you lose

David Kuo, Head of Personal Finance at Fool.co.uk, says: “The test case brought by the OFT against seven banks and one building society is supposed to bring an end to the disputes between customers and their banks over penal charges when current-account holders go overdrawn without authorisation.

“However, bank customers may not benefit nearly as much as they think if the OFT wins its arguments in court. Prior to the court case, disagreements over bank changes were handled by banks on a case-by-case basis. In most instances, refunds were offered in full if customers pressed their banks with the threat of legal action.

“However, a win by the OFT could result in banks refunding only the difference between charges set by the regulator and the fees in dispute. This is likely to see bank customers being offered lower levels of compensation.

“That however, may be preferable to a win by the banks because they will then be allowed to charge whatever they want if customers go overdrawn without prior agreement.

“Fool.co.uk therefore urges bank customers to pay close attention to their finances. As far as banks are concerned, the outcome of the court case may be one of heads I win, tails you lose. But vigilant customers can take proactive steps to ensure that banks never win regardless of which side the coin falls.”