Free UK banking being funded by customers
A man that runs a company that specializes in helping consumers in the UK to reclaim free banks charges has stated that the current free banking system in the UK is unfair, and that consumers that are being charged hefty overdraft and returned cheque or direct debit fees are ending up funding the free banking system for everyone else. These charges have been at the centre of controversy over recent months, with even financial regulators claiming that they are fair and unlawful, and with many consumers reclaiming charges going back up to six years.
Filipe McManus from Reclaim Bank Charges claims that his company's research suggested that around three quarters of the consumers in the UK found that the current system of free banking in the UK was an unfair one, and felt that they were being penalised for going even slightly over the limit in order to be charged hefty fees and make up for the fact that banks are offering 'free' bank accounts to customers.
According to recent research the cost of administration to banks for exceeding an overdraft, an unpaid direct debit, or a returned cheque is between £2 and £4.50. However, banks have been charging customers up to £40 each time, making a tidy profit of up to £38 pounds for every penalty fee charged. However, regulators state that these fees should reflect the cost to the bank and should not include punitive charges, which is why regulators are currently reviewing the system. A decision about how much banks should charge is expected this month or next month, although no definite timescale has been given.
According to McManus: "Basically the way the charges work at the moment customers are paying not just for when they go overdrawn but so that other people can have free banking. They have propped up the whole system."
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