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The recent controversy over the hefty unauthorized borrowing fees charged by banks when consumers go into the red has really hit the financial headlines lately. The Office of Fair Trading is already putting together a report in relation to these fees in a bid to get the charges that are made by banks for this type of incident curbed. Banks are making billions of pounds from charging these fees to UK customers, as they incur very low administrative costs yet charge the customer hefty fees.
In a recent survey by the Financial Mail it turned out that around sixty percent of consumers thought that they were untreated unfairly by their banks. Around seven hundred people were surveyed. Amongst the charges from which banks are making these huge profits are charges for going over your overdraft limit, which can reach around thirty pounds per time in some cases, charges for bounced cheques, and charges for unpaid direct debits, where the consumer has not got sufficient funds in their account.
The findings of the report and investigation being handled by the Office of Fair Trading in relation to banking charges should be released in around March, and this could finally result in the ceiling on fees that can be charged by banks. In a similar situation last year credit card companies were forced to curb their charges with penalties of no more than twelve pounds being enforced.
Emma Bandy, personal finance campaigner at consumer lobby group 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.'
Tom Smith
06.02.07
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