Has the OFT bottled the banking overdraft debacle?

The Office of Fair Trading (OFT) tonight stands accused of abandoning UK banking customers with the announcement that it will be left up to the banking industry to improve practices and bring in new regulations in the short to medium term. The OFT has given the banking industry two years to make changes such as giving customers the chance to opt out of unarranged overdraft facilities and more compassion for those who have fallen into financial difficulty.

Despite the fact that the UK authorities had spent significant time and significant effort in taking the banking industry to court regarding banking charges in general, the saga has ended in a disappointing fashion. Indeed there were promises that the OFT would look at taking other action against the industry after losing the banking charges challenge in the Supreme Court, although these new court actions have not materialised.

This is yet another example of the UK financial industry being in many ways more powerful than the government and the regulators put together. After receiving billions upon billions of pounds of taxpayer's money the industry is still dictating the terms and conditions of its very existence and despite regulatory action on a number of fronts it is still very much business as normal.