The Government has promised action on banks and building societies that continue to levy 'unfair' overdraft charges.

Dug in the endless text of today's Pre-Budget Report, Westminster states it will work with consumer groups, regulators and current account providers to ensure fairer and simpler charges for breaching your overdraft limit in future.

But if firms do not make their charges fairer voluntarily, it will get tough (see the Bank Charges Q&A guide).

The report says: "The Government will work with consumer groups, the Office of Fair Trading (OFT) and the banks in order to agree a new framework that will make bank charges fairer, simpler and more transparent in the future.

"The Government will take action to deliver change if a voluntary approach does not result in a fair outcome for consumers."

Court blow

Two weeks ago today, the Supreme Court ruled the OFT could not assess the fairness of bank charges for people who are overdrawn, in a victory for banks.

This was a major setback for reclaimers though the OFT may still pursue other legal avenues.

Some banks have already reduced their unauthorised overdraft charges, such as Halifax/Bank of Scotland and Natwest/Royal Bank of Scotland.

However, many providers still levy fees of well over £30 a time for slipping over your limit.

Wendy Alcock, MoneySavingExpert.com money analyst, says: "These are encouraging words from the Government. Let's hope it spurs banks into action to ensure their charges are fairer in future."

Complaints handling

The Government also states more can be done to reduce the number of complaints wrongly rejected by financial firms which are then referred to the independent Financial Ombudsman Service.

As a result, the Financial Services Authority, OFT and Ombudsman will publish a discussion paper in February setting out the actions they plan to take to improve the way firms handle complaints.

See the Pre-Budget Report round-up MSE News story for more info...

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