The fallout from reclaiming bank charges

Consumers should be encouraged to fight against excessive, unfair bank overdraft charges. But it would seem success in taking on the big banks will be a Phyrric victory. The bank backlash cannot be far away. Whatever happens you can be sure that ultimately bank customers will pay.

First Direct has already begun charging some of its customers £10 a month on their current account and Nationwide, the largest building society, has said fee charging cannot be ruled out. Others banks will almost certainly follow in time.

It is typical and very convenient for the banks to start deflecting the furore over their staggeringly high charges by hinting that if more consumers take action to reclaim them it will lead to the end of free banking for all.

The big banks are clearly rattled by the large numbers of consumers taking action to reclaim charges – estimated at more than half a million to date. But they are unlikely to take it lying down. Bank bosses will not easily give up the billions in revenue the charges generate.

Account fees and interest rates have already risen in the credit card market since the Office of Fair Trading told card providers to cut penalty charges imposed on customers who miss repayments. The OFT is due to report on unauthorised overdraft charges in March and if it does recommend similar cuts in these fees then the banks are likely to react in a similar way – by introducing monthly account fees and upping interest rates.

So what should consumers do? They certainly should not be deterred from reclaiming bank charges if they think they have been treated unfairly.

It is about time the banks charged a reasonable fee – one that fairly reflects the costs incurred for unauthorised borrowing. Research suggests the cost to the banks of a customer exceeding their overdraft is about £4.50 – not the typical £30 fee charged currently. If these fees are not being used as a profit stream, as the banks insist, then why not prove in the courts why it costs £30 when someone slips a few pounds over their overdraft.

A bit of honesty and transparency from the big banks over their charging would make a refreshing change but it is not likely to happen any time soon.

- Jo Thornhill, Financial Mail on Sunday

>> Have your say on bank charges in the comment box below or join the debate on This is Money's bank charges forum.

Comments

[Robert Clark]

Many bank charges are proven wholly iniquitous in a high street where Joe and Jill Flipperty-Gibbet expect so-called experts in bookkeeping and accounting to look after their money affairs without that they are aware that poncified usurers snidely dip itchy mits into accounts gratis to take additional unjust banking cuts.

Why can’t WE the banking public get it into our heads it is WE who provide to the economy with our money, taxes, etc. WE are the ones who deign to allow ‘banks’ to manipulate our salaries, wages, mortgages, savings, etc. so as to help ‘the world go around.’ WE are the master where money at the very outset is concerned and should not allow ourselves to be in thrall or be intimidated by bored automata in counting houses.

And, if those who serve us become too big for their boots we jolly well give them what for and demand they pull their socks up. – Otherwise, we send them packing and put our money into new schemes that work fairly and more profitably for us. –

(Or; not at all. There has to be that, for the time being, uncertain option.)

Of course, the prospect is putting the money market into a right old tizz that it is finding an irritant to deal with. Well; it would. - And we may sympathise. We know how it feels.

Since pre-competition ‘eagles and black horses’ and their ravenous ilk have pecked unreasonable morsels too long from our accounts or have ridden roughshod over our besmirched statements.

The opportunity to ‘wipe the insincere smile off the bank manager’s face’ (and; not only theirs –‘utilities’ come to mind) is, with so much more competition out there affording us ways and means to regain control of our money.

[John Farrell]

I want to start a blogg that allows people like me that have been getting the long expensive run a round by my banks such as HSBC and Household these banks or as I have found out the hard way are one have made a practice of misleading and close to lieing about my deallings with them and they have not helped me rebuild my credit they have made it worse and act like they care less.

[Christine Chalmers]

Yesterday I received a 1 and half page from Lloyds TSB extolling the virtues of why they have charged me £30 every month when I overdraw. They also asked for a £10 fee for producing the statements I require.

As far as I can make out, they owe me £2,500. I do not have the money to go to a solicitor as now I am owing the bank about £300, due to a glich when they decided to open a savings account that I didn't really want. I am now confused as all the money I get is my pension every month, and I had control of my account until last October. So now I am in a quandry about what I have to say to my creditors.

In fact I feel rather worried that the bank can not pay anything from my account until I get my pension. I did take a £6,000 loan out about 4 years ago on a 6 year payback, but will now be over £11,000 when it ends. I am 67. Can you give me any support in this problem that is now worrying me very much. I do not get much help from my husband, as my financial dealings 'makes him angry', and thinks I am stupid and I know nothing about money'! Thank you.