It's only half-time in overdraft charges battle, banks are told

But the tough-talking boss of the Office of Fair Trading says supermarkets are 'competitive' and an ombudsman is not needed

By rights, John Fingleton should be a dull Sir Humphrey, gingerly picking his way through the jungle of regulation that governs business, wary of the man-traps lying in wait for the head of the Office of Fair Trading (OFT).

As it is, in his interview with The Independent, the Irishman's eyes twinkle when they alight on a controversy and positively dance while his words charge through the thicket like an express train on an invisible swerving track.

In his first four years, the fast-talking economist has careered through British business, smashing cartels, launching inquiries into price-fixing involving household names and handing out multimillion-pound fines.

On the list of those he has fined so far are: Asda; the tobacco giant Gallaher and others £173m for fixing cigarette prices; Balfour Beatty and scores of other builders £129m for collusion; and British Airways £121m for a fuel cartel with Virgin (which escaped a fine by turning supergrass.) Dairies, Sainsbury's and Asda (again) received a £116m fine for colluding on milk; and a cartel being run by six recruitment agencies, including one owned by the Dragons' Den star James Caan, have paid out £39m. In its highest-profile case, the OFT is taking on high-street banks over their £2.6bn-a-year overdraft charges.

At the OFT's concrete office-block off Fleet Street, London, Mr Fingleton stresses that, despite bruising many reputations and balance sheets, he is not anti-business. Quite the contrary, he says: price-fixing hurts firms by making them dangerously complacent. He singles out international phone calls and air travel as evidence of the benefits of competition: prices have fallen by 90 per cent and 80 per cent respectively during the past 20 years. But isn't it worrying that major supermarkets were fixing the prices of staples like tobacco or milk? "The work we do in this area is important," he replies. "But I think looking at the overall context of the supermarket sector, it's highly competitive. Prices in UK supermarkets are low by international standards. They've come down enormously. There's been huge innovation in supply and distribution, so I think 99 per cent of what supermarkets have done is very pro-consumer.

"When supermarkets enter other sectors, whether it's petrol retailing or banking or other things, it's generally been good for consumers," he says, dismissing any need for shoppers to have a supermarket ombudsman.

"As with airline pricing, very often it's in these very competitive markets where people have an incentive to do things. And it's often people within organisations, not necessarily at the top, who think: 'Actually my figures need to be improved and I will engage in this type of activity.'" The public, then, should not be worried by supermarkets but "a lot more worried" about professional and financial services such as banking "where [the public] do need to exercise their minds more about what value means, what contracts they're entering into, and be more wily as consumers."

Mr Fingleton, 44, was re-appointed to his £272,497-a-year post for a further five years in November, a few days before he suffered one of the biggest setbacks of his tenure, in his three-year battle against overdraft charges. When he arrived in October 2005 after five years in charge of the Irish Competition Authority, the OFT had been doing "very good work," he says, but he decided it should do fewer, bigger investigations.

On 25 November, the Supreme Court embarrassingly threw out one of these: that banks were breaking consumer law by charging customers up to £35 for running up unagreed overdrafts. But the OFT is confident that in the next few months banks will lower their charges – otherwise it will recommend Government legislation and there is political will from all three parties. Tellingly, Mr Fingleton, whose college nickname "Fingers" referred to his reputed Machiavellian politicking, describes the court defeat as "half-time".

"I do think that with all of these cases, when these judgments come down very often they can appear to be a 0-1, but the reality is that in most of these cases is more like 48-52," he explains. "Not every consumer who got charged for unauthorised overdrafts necessarily should get their money back, and not everything the banks have done has been bad or wrong."

During the last year or two, he says, income from the fees has fallen by 10 per cent, £260m a year: "So the banks' revenues have probably fallen quite dramatically down to the OFT." In any case, he says the regulator's job is to test the law. If it always won, that would "suggest that we were always shy of where the law actually was".

No one wins from the current system of charges, he says. "One way of thinking about it is that if everybody stands up at a football match, nobody sees any better at the end of the day, but it will be less comfortable. So the banks and consumers have got themselves into a situation which is not particularly good for anybody but nobody wants to be the first to sit down and see nothing. Our job is to manage a process where that happens. That may mean more up-front charges... Everybody knows banks have costs, but at the moment we just don't see where they pay for them."

Another big investigation is into web shopping. Mr Fingleton has respect for Ryanair, run by fellow Irishman Michael O'Leary, but castigates its "puerile, almost childish" behaviour over fees. "We've certainly tackled a lot of those issues with airline pricing, by having the prices up-front," he says, but for some things, such as credit-card fees, passengers cannot easily compare and switch products.

Charging down the hidden highway between consumers and business, he shows no sign of running out of steam.

John Fingleton: CV

Age: 44

Education

1983-87: Trinity College Dublin scholar

1987-91: M. Phil. in Economics, Nuffield College, Oxford

1991: D. Phil in Economics, Nuffield College, Oxford

Jobs

1991: Research officer, London School of Economics

1991-2000: Economics lecturer, Trinity College, Dublin

2000-2005: Chairperson, Irish Competition Authority

2005 to present: OFT Chief Executive

Current inquiries

Market investigations of home sales, used cars, bank current accounts. Competition inquiries into airline fuel surcharges, milk, tobacco, recruitment agencies