The OFT’s recipe for fecklessness

Next month the Office of Fair Trading will produce its long-awaited report into parking fines. It is expected to rule that charging motorists £60 for overstaying their welcome at a parking meter is unfair, and that in future councils must charge motorists only what it costs to issue the parking ticket.

Actually, that’s not quite right: hell will freeze over before councils stop raising revenue through parking fines. What the OFT is really going to produce is a report on what it considers to be the ‘unreasonable’ practice of banks charging customers up to £39 for going into unauthorised overdraft. It will propose that banks be allowed to charge those who go into the red without permission only as much as it costs the bank to send a warning letter — which consumer groups claim is as little as £2.50 and the OFT is believed to estimate at £12 to £20.

But what’s the difference between overdraft charges and parking fines? Both exist to penalise those who break the rules. Indeed, without penalties it would be impossible to enforce the rules at all. Who would bother where they parked if the worst that could happen was that they would be fined the few pence it cost a traffic warden to write out a ticket? Likewise, who would bother to ask their bank before diving into the red if it was not allowed to penalise them for doing so? The effect of the OFT’s initiative will be to create a new facility for unsecured debt: hardly the wisest policy given the growing fecklessness of British consumers, 67,684 of whom went insolvent last year.

Which?, the consumer group that began the campaign against overdraft charges, has certainly caught the public imagination.