A win for the banks?
It has just been announced that the Supreme Court has ruled in favour of the banks in respect of alleged unfair banking charges.
This ruling will disappoint those banking customers who were hoping to reclaim billions in pounds in historic bank charges. It means that earlier court rulings allowing the Office of Fair Trading (OFT) to look into the fairness of charges on unauthorised overdrafts have been overturned.
The banks will clearly be happy with this ruling. They stood to lose around £2.6bn in annual income if the Court had ruled in favour of the OFT. If this had happened, one possible consequence would have been the end of ‘free’ banking for all bank customers.
Of course banking services are never really ‘free’. Customers who stay in the black might not face explicit charges for running their accounts, yet they do pay through low or zero interest rates and charges when they use other services.
The ancillary products and services on offer from the banks do not always offer best value, so they also profit from their customers who go direct rather than seek independent financial advice. This is particularly relevant when you compare the cost of the protection products and the performance of investment options on offer from the various banking groups.
The ruling this morning might not be the end of this long running saga. The OFT have said in the past that they would still try to use their other powers to launch a review if this court ruling went against them today.