Unfair charges bring in billions for the banks

Recent reports have shown that not only are many UK consumers unhappy about the way that they are treated by their bank, but also that the banks are reaping billions of pounds in revenue by applying what can be construed as unfair and unjustified charges to consumers' accounts. There has already been much controversy over unauthorised overdraft fees that banks are applying to consumers' accounts when they accidentally go into the red even by a small amount.

Consumers are already being urged to contact their banks and speak to the bank with a view to getting a refund on these charges for the past six years. Many have already started the ball rolling, and many others have successfully reclaimed anything from hundreds to thousands in unfair fees. The banks have dragged their feet and fought to avoid paying these claims, but so far have always paid up before the consumer has to resort to court action.

The Office of Fair Trading has been investigating bank charges and putting together a report with the intention of ensuring that the charged applied to accounts by banks are curbed and fair. Banks typically incur very low administration charges for things such as sending out letters but they charge the consumer way more than it costs – sometimes charging thirty or thirty five pounds when the administrative cost to the bank is under five pounds.

One personal finance campaigner from Which? stated: 'We are not against banks making money --that's important for the economy. But we strongly object when customers are not getting a fair deal and that seems to be the case with overdraft penalty charges.'

It is thought that the Office of Fair Trading will release information in relation to its investigation in around March, and banks could be hit with ceiling limits on such charges in the same way that credit cards were recently forced to place a limit on charges.