Bank charges show far from over

April 25, 2008

cash1.jpgConsumers might be one step closer to being able to claim back billions of pounds in bank changes following the High Court ruling this week that paved the way for the Office of Fair Trading (OFT) to assess bank charges for fairness. But it’s not all rosy in the garden for bank customers.

The show is far from over, and dragging the process out is costing consumers 111 pounds per second, according to consumer group Which? Based on the OFT’s estimate that banks make up to 3.5 billion pounds per year from unauthorised overdraft charges, the amount the banks have made since the start of the test case on Jan. 14 at 10 a.m. will hit 1 billion pounds just before 5 p.m. this Sunday. That is the equivalent to 110.98 pounds per second — or 399,600 pounds per hour.

Further High Court hearings will consider a fair amount for bank charges, and the exact timetable will be decided at a hearing on May  22. In the meantime, hundreds of thousands of cases are still on hold: the Financial Services Authority gave banks a waiver from dealing with bank charge reclaiming cases until after the case — meaning they needn’t respond to complaints in the meantime. The clock is ticking: you can only attempt to claim charges over the past six years (five in Scotland), and delaying might mean you lose the ability to get old charges back.

And there could be one even more significant upshot: an end to “free” banking.

As it stands, high street banking is largely free for those who remain in credit and do not flout the rules. Contrary to popular belief — 60 percent of UK consumers believe that Britain’s banks have the highest bank charges in the world — UK bank accounts are, in fact, ranked amongst the top three countries in the world for best value, a survey from EDS shows. This is due to banks and building societies offering free overdraft facilities for student and graduate accounts, credit cards offering 0 percent finance and attractive returns on instant-access savings accounts.

However, those who slip into the red — either an authorised or unauthorised overdraft — are hit with interest or fees. A curb on fees could very well see banks impose annual or monthly banking fees for all customers. That is unlikely to please over half of the population: 51 percent of consumers polled by EDS would prefer charges to come from less transparent means, such as lower interest rates on their current and savings accounts, rather than a monthly charge (37 percent) or per transaction (12 percent). Those banks who start to impose fees first will, of course, haemorrhage customers. But, if rivals follow suit, what choice will consumers have?

3 comments

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Frankly I think that the OFT has got it wrong.
The charges are clearly in the Terms and Conditions.People should be responsible for their own actions.
Going overdrawn without a prior arrangement is nothing more than stealing.
One cant go into a shop, pick up something and walk out without being accused of stealing so why should some people try to take liberties with their Bank and then cry “Foul” and moan about being charged.
I think Martin Lewis has fuelled the flames and he is misguided.

Posted by Ralph Broad | Report as abusive

Martin lewis may of fuelled the fire but he has all the right to do so, i agree that there should be a charge but can you honestly agree with the amount at witch they do charge, it so wrong to so and i hope the banks pay for it

Posted by scott bracewell | Report as abusive

I was charged £20 for a standing order failing because i was 30pence short in my account then also a 30pound overdraft fee. Form the nationwide. I am a mother of two children and work hard for my money i explained this to the nationwide when i appealed against the charges but never got any where except to gain more charges because when they took it out of my account i did not have enough to cover the direct debits that were due all told they took 110 pound from my account that month. This is daylight robbery.

Posted by Michelle peter | Report as abusive