- Between 2008 and 2009, only two of the top eight banks significantly altered their charging structure
- Over 20 per cent of moneysupermarket.com users currently have a repayment request pending
Wednesday's decision could mean a major shake up for the banks, threatening the traditional notion of free banking, but consumers should be aware that any repayment of unfair charges could take a while and compensation will be awarded on a case by case basis. Over 20 per cent of moneysupermarket.com users currently have a repayment request pending; over half of these users think that recouping their money might be a long and drawn out process, and the other half are hoping the issue will finally come to an end.**
Kevin Mountford, head of banking at moneysupermarket.com, said: "A victory for the OFT would be a major triumph for consumers in one sense, however as with all major regulatory change, it's important to consider the impact for consumers. If banks are forced reduce penalty charges they are likely to introduce a regular charge on current accounts, thus mirroring the system used most consistently across the world and signalling the end of free banking in the UK.
"Banks will always find a way to recoup the income they stand to lose if the billions they charge from a violation of overdraft limits, sending out warning letters and returning bounced cheques is deemed unfair."
In response to the Court Case, banks and building societies have attempted to simplify their charging structures over the past year and many have adjusted their unauthorised overdraft fees. However these changes ultimately do little to address the issue of unfair charging and from 2008 to 2009, only two of the top eight banks significantly altered their charging structure.***
If the Supreme Court rules in favour of the OFT, then banks could be forced to recoup billions of pounds in revenue by starting to charge their customers for services that have traditionally been free such as money transfers, ATM withdrawals and cheque payments.
Kevin Mountford said: "All consumers could be hit financially if the banks are forced to recoup their lost revenue in other ways, regardless of how they currently use their bank account. We can expect to see a two tier banking system developing whereby banks offer superior products and services to more profitable customers and offer a more basic service to others.
"Regardless of the outcome on Wednesday, we are likely to see banks moving away from more traditional charging structures. If we are to pay for banking, then one would hope the banks would be motivated to offer more competitive packages, reward loyalty and ultimately build better relationships with their customers."
-Ends-
Notes to editors:
*Opinium Research carried out an online poll of 1,994 British adults from Tuesday 3rd March to Thursday 5th March 2009. Results have been weighted to nationally representative criteria.
** The poll was conducted on moneysupermarket.com between 19/11/2009 and 24/11/2009 with 705 respondents
***2009 Current Account Overdraft Charges
|
Provider |
Account |
Authorised Overdraft Rate (TYPICAL EAR) |
Unauthorised Overdraft Rate (TYPICAL EAR) |
Unauthorised Overdraft Rate Charges |
|
Abbey |
Preferred Overdraft Rate Account |
0%
(Introductory Rate for 12 months, 12.9% thereafter) |
28.7% |
Instant Overdraft Monthly Fee - £25
Transaction £0-£9.99 will cost £5
£10-£19.99 will cost £15
£20-£29.99 will cost £25
Over £30 will cost £30 |
|
Barclays |
Barclays Bank Account |
0%
(Introductory Rate for 12 months*, 19.3% thereafter) |
£22 once in Personal Reserve |
£8 Returned/Guaranteed Transaction Fee, max of 5 per day
(comes into effect once Personal Reserve has expired) |
|
Halifax |
Reward Current Account |
£1 per day up to £2,500
£2 per day over £2,500 |
0.00%
(£5 per day) |
Exceeding overdraft limit fee: £5 per day |
|
HSBC |
Bank Account |
19.90% |
19.90% |
1st overdraft in 6 months = free
Subsequent overdrafts = £25
Overdraft Fee -
Up to £10 = no charge
Up to £25 = £10 per item
Above £25 = £25 per item |
|
Lloyds TSB |
Classic Plus Account |
18.90% |
18.90% |
Monthly Fee - £15 per month
Daily Fee:- Less than £25 - £6 a day
£25 to £100 - £15 a day
More than £100 - £20 a day |
|
NatWest
RBS |
Current Plus Account
Interest Paying Current Account |
19.24% |
19.24% |
Maintenance Charge - £20
Paid Referral Fee - £15 (max. £90 per month)
Guaranteed Card Payment Fee - £15 per transaction (max £90 per month)
Unpaid Item Fee - £5 (max. £50 per month) |
|
Nationwide BS |
FlexAccount |
18.9% |
18.9% |
Unauthorised Overdraft Charge - £20
Unpaid Item Fee - £30
Paid Item Fee - £21.50 |
*Introductory rate may be withdrawn at any time
Sourced by
www.moneysupermarket.com 19.11.2009
2008 Current Account Overdraft Charges
|
Provider |
Account |
Authorised Overdraft Rate (EAR) |
Unauthorised Overdraft Rate (EAR) |
Fees |
|
Abbey |
Current Account
Preferred Overdraft Rate |
0% for 12 months. 12.9% thereafter |
28.70% |
Instant Overdraft Fees
£0-£9.99 - £5
£10 - £19.99 - £15
£20 - £29.99 - £25
£30+ - £35
Instant Overdraft Monthly Fee (charged per calendar month during which and Instant Overdraft is used) - £25 |
|
Barclays |
Bank Account |
0% - for 12 months if you switch to Barclays and pay in at least £1,000 per month. 17.9% thereafter. |
0.00% |
Personal Reserve Fee - £22
Returned Transaction Fee - £8 per item (up to max of 5 per day)
Guaranteed Transaction Fee - £8 per item (up to max of 5 per day) |
|
Halifax |
High Interest Current Account |
15.90% |
28.80% |
Unarranged overdraft - £28 (1 per month)
Paid items - £35 (max 3 charges)
Unpaid item -£35 (max 3 charges) |
|
HSBC |
Current Account |
19.90% |
19.90% |
1st overdraft in 6 months - free
Subsequent overdrafts - £25
Return fees:
Up to £10 - free
Up to £25 - £10 per item
Above £25 - £25 per item |
|
Lloyds TSB |
Classic Plus Account |
18.90% |
18.90% |
Unplanned Overdraft Monthly Fee - £15
Unplanned Overdraft Daily Fee
Balance less than £25 - £6 per day
Balance £25 to £100 - £15 per day
Balance more than £100 - £20 per day |
|
NatWest |
Current Plus |
19.24% |
29.69% |
Maintenance Charge - £28
Paid Referral Fee - £30
Guaranteed Card Payment Fee - £35
Unpaid Item Fee - £38 |
|
Nationwide BS |
FlexAccount |
12.90% |
24.90% |
Unauthorised overdraft fee - £20 per month
Charge for transaction unpaid - £30
Charge for cheques guaranteed - £21.50 per transaction |
Sourced by
www.moneysupermarket.com 31.10.08
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