Consumers in the UK don’t appreciate how lucky they are sometimes. The Office of Fair Trading has been doing a very good job in fighting for fairness and restitution of unfair bank charges for consumers. This is something that you would not find in many other countries, including the United States of America.

 

But beginning in 2005 the OFT took up the case of high credit card default charges and found that they had been set at an illegal and unfairly high level.

 

The OFT found that under the Unfair Terms in Consumer Contracts Regulations, 1999 (UTCCR) that consumer were being mistreated by UK banks.

 

It is true that while only a Court can provide an exact determination what is unfair, the OFT has a duty to consider and review complaints received by consumers claiming to have been subject to unfair terms. And they did so after consultation with the major banks.

 

A contract term is considered to not be fair to the consumer under UTCCRs if: ‘…contrary to the requirement of good faith, it causes significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’

 

One of the core components in the argument of unfair bank charges stems from the fairness of charges levied under common law where the amount payable at breach must be comparable to the actual cost of the breach. This would mean that banks can’t charge £35 for an actual breach that costs the bank £12, an amount the OFT stated was fair and reasonable.

 

These issues came to light through the case THE DIRECTOR GENERAL OF FAIR TRADING v FIRST NATIONAL BANK PLC.