The Money Stop

According to a recent report the vast majority of consumers do not want to see the introduction of monthly banks charges even if it means that there will be a fairer system in place with regards to penalty fees for unauthorised overdraft use, bounced cheques, and returned direct debits. Research was recently carried out by MoneyExpert.com, and showed that nearly 60% of consumers did not want to see monthly account fees brought in even if there were caps placed on penalty fees.

The research stems from the recent High Court test case into bank charges, with the case brought by the Office of Fair Trading against the UK’s major banks. Banks have been charging consumers close to £40 per charge in some cases, which the OFT states is nowhere near the cost that the banks actually incur. The presiding judge in the case ruled in favour of the OFT, allowing it to assess banks’ terms and conditions – including these charges – for fairness, although the banks have appealed against the ruling.

Many officials are predicting that if the banks are forced to cut this charges in the same way as credit card provider were a couple of years ago then they will look at other ways to try and recoup the costs, one of which is likely to be a monthly account charge applied to all account holders. However, consumers do not want to see an end to free banking even if the penalty charges are cut and made fairer. A recent report shows that some banks have already raised the monthly fees on packaged current accounts.

One industry official said: ‘The recent announcement provoked a huge amount of excitement, yet it’s worth bearing in mind that this legal battle is far from over. We still have to wait for a further hearing - which might not be until next year - before it is decided by the court whether or not the charges are unfair. And the banks actually persuaded the judge that these are service charges, not penalty fees, meaning the fee they charge for unauthorised overdrafts doesn’t just have to cover their costs.’

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