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OFT: Banks making billions in overdraft charges

14 September 2007
Banks are making billions a year from overdraft penalty charges, according to the Office of Fair Trading (OFT).

The consumer watchdog estimated that they are making between £2 billion and £3.5 billion from customers charged up to £30 each time they exceed their authorised overdraft limit.

Leading the investigation, Cavendish Elithorn, senior director, said: "The range is broad as the figures are still subject to analysis" but could not state how much of the revenue was profit.

Thousands current account customers have already reclaimed unauthorised overdraft charges from their bank over the past year, claiming that they are illegal.

According to the Times, the five biggest banks refunded in excess of £400 million in the first half of this year alone.

Further refunds have been suspended as the OFT's case will be heard in high court in January.

The OFT stated that documents filed at the high court relate to the question of whether the fairness test in the Unfair Terms in Consumer Contract Regulations applies to the charges.

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