Loss for banks in OFT court case could be bad news for consumers

As one of the most important court cases to hit the financial industry in years finally begins, the Office of Fair Trading’s (OFT) court case against eight leading UK banks into unfair bank overdraft charges has been widely publicised in the media as a battle between consumers fighting for their rights and unfair actions by leading banks.

However, while the legality of the charges remains open to legal clarification, in a wider sense if the OFT hearing goes against the banks, personal finance and advice website financedaily.co.uk claims that far from being good news for consumers it is likely in the long run to make the banking climate worse for the consumer.

If the banks lose the OFT case they will be likely to have to pay out a billion pounds in compensation. FinanceDaily.co.uk believes that there is no way that these banks will simply sit back and write off that debt.

Dale Lovell, Editor of FinanceDaily.co.uk explains; “If the banks lose the case it will almost certainly be the end to ‘free’ banking in the UK because the banks will have to find alternative ways of earning money back from customers.”

FinanceDaily.co.uk also argue that interest paid by banks on current accounts, paltry as it may seem, but there nonetheless on current accounts, will more than likely end, with the introduction of monthly standing charges for current accounts a distinct possibility, too.

“If the banks lose this case we will go from a position of free current accounts to being charged for current accounts. While a victory for those who have suffered under unfair penalties will view victory as a good thing, in the end if the banks lose, it will effectively mean that the majority of bank customers, who manage their bank accounts properly without going into debt, will end up paying for those customers who get into financial difficulty.”

“If the banks lose, there is a distinct possibility that any restrictions on bank profits will simply be passed on to the consumer in the form of current account charges.

So, is a loss for the banks really in the public’s best interests?’”