Banks blasted over penalty chargesBillions paid contribute to debt crisis says MP
17 January 2007
An MP has claimed High Street banks are ‘mugging’ their customers by imposing billions of pounds worth of charges.
Liberal Democrat social exclusion spokesman Matthew Taylor slammed the penalty charges as a ‘major contributor to the debt crisis.’
He told MPs the banks knew the charges were a ‘rip-off of trusting and often impoverished customers.’
Which? has been campaigning for an end to unfair default charges on current accounts and last June calculated that bank customers pay £4.7 billion each year in default charges.
Current account charges
Which? has slapped an ASBO – an Anti-Social Banking Order – on current account providers for the way they treat customers using unauthorised overdrafts.
Which? personal finance campaigner, Emma Bandey, said: ‘Which? believes that bank charges should be fair and reflect the costs involved. They should not, as they seem to be now, an arbitrary figure picked to make the most money out of unsuspecting customers.
‘The legal position is clear; default charges for bank accounts cannot be disproportionate to the cost of administrating the charge.’
An Office of Fair Trading (OFT) investigation into credit card charges last year ruled that penalty fees of more than £12 were unfair.
It has since launched a similar probe into bank charges. Emma Bandey said: ‘Which? supports the Office of Fair Trading's investigation into these charges as we have been asking the banks ourselves to justify such charges.
‘In the six months it may take to conduct the “fact find”, customers could pay up to £2.3 billion from default charges, so we hope the banking sector provides the necessary information quickly.
‘Many people have successfully won hundreds and even thousands of pounds worth of charges back, consumers should not be put off challenging their banks.’
The British Bankers’ Association has previously said that the current account charging system is fair and legal.