Bank Account Costs – Investigation By OFT
A wide ranging review of charges imposed by the banks on their customers has been instigated by the OFT. This follows an earlier, initial, review of Bank Charge penalty fees which led the OFT to the conclusion that there is a need for a more detailed study of the way banks operate their customer’s accounts. The OFT is concerned that customers are not aware of the true cost of their banking with examples such as poor rates of interest on current accounts and unkown additional costs of purchases abroad.
When the OFT came to the conclusion that the charges applied to credit card accounts for late payments and going beyond credit limits, they informed the credit card companies that they were of the opinion that charges of over £12 per item was unreasonable. The OFT said such charges would be challenged in the courts since they considered they were very likely unlawful. The credit card companies complied, grudgingly and still maintaining their assessment that the charges were reasonable and justifiable, reduced their fees to the specified £12.
What they did next was to start applying other fees and charges elsewhere and increased interest rates. Clearly concerned that their enormous profits would be harmed by the reduction in fees.
The OFT, mindful of this behaviour, seems to have come to the conclusion that the banks cannot be trusted to treat their customers fairly, which many customers would no doubt agree with, so they are having a wide ranging review to look at all aspects of the way banks deal with customer accounts.
Preliminary results are expected towards the end of the year. We look forward with interest.
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