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Over recent months the Office of Fair Trading has been looking into the extortionate rates that some UK banks have been charging customers for going over their authorized overdraft limits. With banks paying under five pounds in normal circumstances to deal with the administration of unauthorized borrowing, and charging consumers over thirty pounds per unauthorized transaction in some cases, many lenders are making a huge profit from consumers that are clearly already having financial problems.
According to the consumer group Which? banks are now using underhand tactics in order to try and get away with charging these fees. Consumers in the UK have been urged to challenge the charges that they have incurred from their banks for unauthorized borrowing on their overdrafts, and as a result of this may end up having to pay an accumulation of charges back to many of their customers who decide to challenge them.
According to the consumer group some banks are using tactics such as charging for statements, failing to send out back statements for consumers to check over, threatening to close the accounts of customers that challenge overdraft charges, and threatening consumers that make this challenge with debt collectors. In the meantime, the Office of Fair Trading continues to put together a report that could result in unauthorized borrowing fees being capped in the future.
Doug Taylor, personal finance campaigner at Which? stated: 'We believe that banks have been over-charging customers who exceed their overdraft limit for years…In an attempt to avoid paying consumers what they are due, we have found that banks are employing increasingly underhand methods to avoid their responsibility to treat their customers fairly and refund the charges.'
One consumer who had challenged the bank and had taken the matter to court found that the bank had both closed the account and had passed on the customer’s details to debt collectors.
Tom Smith
06.02.07
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