Free banking could disappear within a couple of years

As the controversy over the penalty charges applied by banks to the accounts of customers that exceed their overdraft or credit limit continues to heat up, banks are also taking action in a bid to recoup the revenue that will inevitably be lost once the Office of Fair Trading announces caps on the amount that banks can charge when a customer exceeds his or her limit. The announcement regarding the capping of these fees is expected in March, and in the meantime many consumers continue to contact their banks in a bid to try and reclaim these unfair fees going back six years in some cases.

According to one research company, free banking could become a thing of the past in the UK within as little as two years, as banks retaliate against the huge cuts in the amount that they can charge as well as financial losses resulting from many UK consumers claiming back unfair and unlawful charges. Even though the major banks have reported record profits amounting to over forty billion pounds collectively, despite high bad debt levels and claims for reimbursement of charges from thousands of consumers, they are still expected to start charging for current accounts, with a number of banks already applying charges to accounts.

David Black, head of banking at research firm Defaqto, stated: "I will be very surprised if free banking is universally available in two years time. Exceptions such as basic bank accounts for the less well-off will remain but the range of services on those accounts – they don't for instance offer overdrafts – will not be suitable for most customers." He predicted that consumers would soon incur a monthly charge or a pay as you go charge on their accounts depending on the bank, how much they use the account, and the type of account that they hold.