UK consumers don’t want to see bank fees come in
June 4, 2008
The battle between the Office of Fair Trading and the UK’s major banks has been raging for some time in relation to bank charges, and this year saw the issue end up in the High Court, with the Office of Fair Trading stating that the fees charged by banks for unauthorised overdraft use, bounced cheques, and returned direct debits were not a true reflection of the charged incurred by the bank, making them unlawful and unfair.
The High Court test case was heard in January and several weeks ago the presiding judge came to a decision having considered all of the evidence and facts presented at the High Court case. He decided to rule in favour of the Office of Fair Trading, giving the watchdog the authority to assess banks’ terms and conditions for fairness, and determine what would be construed as a fair fee.
Whilst banks have decided to appeal against the ruling they are not able to appeal against the ruling in full, but only certain parts and clauses. In the meantime, speculation continues as to whether banks will start to charge monthly fees to all account holders in order to recoup losses incurred as a result of any reductions in the amount that they are able to charge for these fees.
However, whilst the OFT has been working hard in order to try and put a fairer charging system in place when it comes to bank fees, a recent report has revealed that the majority of consumers do not want to see the introduction of monthly account fees even if this means that there is a fairer and cheaper system in place when it comes to fees applied by banks. Those that are particularly concerned about monthly fees are consumers that have always managed their accounts well and therefore have never had to pay any of these fees - monthly fees would result in all customers being affected and not just those that go over their limit or bounce a cheque.
Recent research showed that 58% of consumers would not be prepared to accept monthly account charges even if this meant a fairer banking system. These charges would effectively mean an end to free banking, which most consumers do not want.
Following the initial ruling one industry official stated: ‘The recent announcement provoked a huge amount of excitement, yet it’s worth bearing in mind that this legal battle is far from over. We still have to wait for a further hearing - which might not be until next year - before it is decided by the court whether or not the charges are unfair. And the banks actually persuaded the judge that these are service charges, not penalty fees, meaning the fee they charge for unauthorised overdrafts doesn’t just have to cover their costs.’
He added: ‘Given that most people would prefer not to see the end of free banking and would only be prepared to pay a modest monthly fee, the majority of bank customers stand to lose if the banks eventually lose this case.’
Recent additions:
- How safe are you when you shop online?
- Could credit union provide the solution to your financial needs?
- Checking your bills could save you money
- Can online bankruptcies work effectively?
- Add structure to your debt and bill repayments
- Can Northern Rock turn itself around?
Related Articles
- Bankruptcy could be the right answer for some borrowers The level of consumer debt and bad debt in the UK continues to rise, and many consumers have found themselves in huge levels of debt,
- First time buyers decide to wait it out First time buyers decide to wait it out According to recent reports many first time buyers in the UK are deciding to play it safe when
- Customers don’t want to pay monthly fees on bank accounts According to the results of a recent survey, consumers in the UK would prefer not to have monthly fees applied to their current account, even
- Look out for hiked up packaged account fees Consumers are being urged to look out for hikes up fees on packaged current accounts from banks, with a number of banks having recently increased
- Mortgage exit fees to be scrapped According to recent reports, mortgage exit fees, which were being charged by many mortgage lenders when the loan was repaid, are to be scrapped following
Comments
Got something to say?