OFT wins first step in overdraft fee test case

The Office of Fair Trading has won the first step in its landmark test case against banks over unfair overdraft fees.

In a High Court ruling today a judge stated that the controversial charges by banks on overdrafts are now subject to consumer regulations.

This means the OFT is entitled to examine in detail whether the fees are fair under regulations governing consumer contracts.

The ruling is a vital step in a potentially lengthy legal battle sparked by tens of thousands of complaints about overdraft and so-called unpaid item fees, which have set as high as £39 per transaction.

The OFT is pursuing the test case against eight high street lenders to determine whether it can force banks to lower their charges, which are levied when a customer bounces a cheque or exceeds their overdraft limit.

Mr Justice Andrew Smith noted that his ruling did not mean that the charges would “necessarily’’ be regarded as unfair, or that they are not binding on consumers.