Nick Clegg demands law change to stop “rip-off” bank charges

Liberal Democrat Leader Nick Clegg yesterday demanded changes to the law following the Supreme Court’s ruling on bank charges.

In a speech given yesterday afternoon on the future of retail banking at the Marketforce and IEA’s annual conference in London, Nick Clegg said:

“The Supreme Court’s decision on bank charges this morning will be a bitter blow to the millions of people who’ve had to pay extortionate fees to their banks just because a cheque has bounced or they’ve unintentionally gone overdrawn.”

“Regardless of the legal position, it simply isn’t right that someone on a low income should pay £25 or more to their bank just because they’re overdrawn by a pound or two.”

“It is absolutely outrageous that one third of all profits banks make on their current accounts comes from unauthorised overdraft charges.”

“The only way to protect millions of customers from being ripped off by their banks is to now change the law.”

Meanwhile, the OFT released the following statement:

“The OFT is disappointed by today’s Supreme Court judgment, which overturns previous High Court and Court of Appeal rulings that unarranged overdraft charging terms can be assessed in full for fairness. It will also be disappointing for many consumers.”

“The OFT will now consider the detail of this judgment before it makes a decision on whether or not to continue its investigation into unarranged overdraft charging terms. It will also explore with others the implications for consumers and for existing and future legislation and regulation. The OFT expects to make a further announcement in December.”

“The OFT set out its concerns in relation to unarranged overdraft charges as part of its 2008 market study. This found that banks earn around a third of their retail revenues from unarranged overdraft charges that are difficult to understand, not transparent, and not subject to effective consumer control.”

“The OFT will be seeking discussions with banks, consumer organisations, the FSA and the Government in the light of this judgment.”

(Photo by the Liberal Democrats on Flickr)