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Good article Mr Peston, but the whole ethos of marketing is to make price less important to the consumer. A Skoda is less expensive than a Volkswagen, which is cheaper than an Audi. But they are all part of the same company, and no one really knows exactly where all the bits for each car is made, and which are now the most reliable.

There is an assumption that if people knew exactly what they were paying [and there is about as much chance of the banks telling us that as of the mobile phone companies being transparent about their costs and charges] they would move to the lowest cost provider.

They will not. I used to work for a bank, and the oft quoted statistic was that people get divorced more often than they change bank ! So if 'attrition' could be kept to fairly manageable levels, most customers were to apathetic ['inertia' was the term used..] to worry about price.

And there is also the fact that whereas banks used to be as unreliable as 70s cars, and might provoke people to switch, there has been a big push to reduce error levels and so forth.

Although whether the banks are now fully on-board with the legislation to enable people to switch accounts more quickly and easily is not something I would wish to comment on..

You know Robert, you ask a very good question there. I can tell you one thing... none of the big five banks in this country give you any good interest on credit balances.

I shopped around in 2005 because I was fed up of my bank at the time pay me a pittance in interest. When I did switch to another bank (who has since joined the ranks of being one of the top 7 in the country), the difference in service and interest was staggering. In my first month with my new bank I was paid more interest than my previous bank had ever paid me in TOTAL - And that's on a simple, identical credit balance as with my old bank. To date I still receive between twelve and thirteen times more interest where I am now than what I used to get.

I have no problem with fair bank charges, but stuff like having a bankers draft written (i.e. a cheque guaranteed and underwritten by the bank) costing around 拢7 - 拢14, I fought tooth and nail to stay on my simple, classic, free banking product. My old bank was desperately trying to move me away from that product, no doubt I was costing them, instead of them costing me. I think it's only fair for the short thrift they've given me over the years.

Free banking?

Those who are fortunate enough to keep their account in credit are paying for their 'free' banking because of the derisory interest that the clearing banks pay. These banks now add insult to injury by expecting us to pay them to access our own money. It's not right and it's not fair. If banks actually had goods to source and sell their profits would be exceptional in the retail sector (see Tesco for comparison).

A couple if issues that really annoy me here in the UK is that when depositing cheques the Banks treat the deposit in the account as a figure of ZERO ie. It does not actually exist, even though it shows in your account, and it is not part of the "actual balance" until the funds have cleared. If you in credit, yet the deposit paid in is greater than your credit balance, you are therefore charged debit interest, and you are then also in a position where you may have cheques dishonored if the so called "debit balance" position is not part of your banking arrangements. THIS TO ME IS NOTHING SHORT OF THEFT BY THE BANKS! What do the Banks do with that money? Does it sit in some sort of "SLUSH" fund earning interest for their benefit? Obviously the person whose cheque has been presented has had their account debited. Why can't the person crediting the funds to their account have it treated as their own? If the cheque gets dishonoured then your account is debited and you should be liable to the position your account balance places you at that time. This is how the Banking system works in Australia and New Zealand as I understand it. Could this be another reason why we have so called "Free Banking" ????
My other gripe is regarding SWITCH transactions. When purchasing something the organisation you buy the goods and/or services from debits your account that day and yet when returning items for refund, when they credit your account back it takes many days for the funds to be returned. Why is this so? To be told it has to do with "internal procedures" is a nonsense. The technology is there to take it staright away, you now have your items back, why can't the money be returned straight away?

It's true that there's a lot of cross subsidy in current account banking.

But surely it is up to customers to wise up on how to get the best deal.

If you go abroad, use a Nationwide credit card for purchases and a Nationwide Flex Account for cash withdrawals.

This has been flagged by just about every personal finance journalist I can think of.

As for free current accounts, I am currently getting 4.17 gross on my high street current account which I regard as a fair deal given the number of DDs, SOs and payments-in it handles.

Why should I pay for delinquent customers? There's no excuse for going overdrawn with 24/7 access to your bank balance either online or via mini statements available from ATMs for those who don't have internet access.

I remember days when my Dad had to pay for cheque books (and I had to do that until recently for cheque books on a bank account in the USA), when I was a student in the late 1970s I had to keep a balance of 拢50 to avoid bank charges. I wonder what that would equate to in today's money.

Of course I'd like to have more interest on my current account but I'd rather not have any charges provided I remain in credit.

Yes, charges for exceeding overdraft limits should be reasonable but every member of my family is able to manage their bank balances and avoid charges. We're not sure why we should subsidise who cannot manage their finances and overdraw beyond their agreed limits.

Excellent article.

The banking situation in this country is a great example of competition not leading to imrpoved service or value for customers. Instead the big 5 all work hard not to ensure they are offering better deals than the others, but to ensure they offer no worse deals than the others. The result is an acceptance of mediocrity.

"overdraft charges, penalty charges, charges for using plastic abroad, charges for buying currency in the UK and so on."

These charges are not going to vanish by removing "free banking", they may be marginally reduced, but more likely there will just be ahost of new charges with ever more elaborate names and less clarity.

For any given individual they should know there own needs - low charges on using plastic abroad for example, and can shop around with that as the main goal. A bit of common sense and effort on the part of the consumer shouldn't be a lot to ask.

Perhaps I am being naive but the current system doesn't seem so bad compared to my banking experiences in Spain.

Banks will make money one way or another, and I'm pretty sure there will be uproar by the likes of "Andrew Comment #7" when they realise what the "true" cost of running an account is.

C'est la vie!

I fondly imagine I do know what's what with my current account. No interest, but it's linked to my mortgage, which taking tax into account gives an equivalent of over 7% interest. I pay over 拢11 a month as a fee which gives me free withdrawals abroad - handy as I need a lot of them - and includes annual travel insurance for the family, so I reckon it is worth it. I've never had to pay any charge or fee apart from that, in about 17 years. A lot of my relatives are still getting ripped off with charges for everything. I actually LIKE my bank!

Retail price inflation is currently 4.8%. The average current account interest rate is 1.5%. So, on average the cost to you of your current account is 3.3% of your balance per year.

I keep my account in credit and I don't pay bank charges, Robert. It was drummed into me when I was brought up that if you have a contract you keep to the terms of it. The offended souls who object to being charged by the banks don't keep to their contracts. That's why they get charged. Why should people like me subsidise them? It's our money they are borrowing when they go overdrawn or exceed the terms of their facilities. The clearing bank system can be criticised for being a cartel and for many other things, but for people like me, it works well enough. Now the "free" banking is going to go the way of With Profits insurance policies and mutual societies.

I don't get much interest on balances in my current account, but I manage my account to ensure that I don't have much in it. Nor do I go overdrawn without prior arrangements.

I get a cheque book, cash card, access to branches, ATM facilities, direct debits, standing orders, statements, etc etc without paying for them. I don't have to carry huge loads of cash around with me. I don't have to worry about payments systems and IT which get my salary paid directly into my account, which ensure my mortgage, Council Tax, utility bills, etc etc get paid whenever they are due. I could go on.

It may be unfashionable, but I think I get a good deal from my bank. My fear of such an OFT investigation is that, in the name (falsely) of seeking to secure a better deal for consumers, banks simply respond by pricing things which we all take for granted at the moment and assume we shouldn't pay for. By all means keep banks subject to close scrutiny, but let's not throw out the baby with the bath-water!

This is perhaps a little unfair to banks. In order to provide the services we want they have to employ staff, maintain premises in key locations, and pay for expensive computer systems. Banks have to generate an income somehow to pay for these costs, and it seems therefore unrealistic to expect them to provide totally 鈥渇ree鈥� banking.

Yes, current account interest rates are derisory. However my bank (most others offer similar arrangements) keeps a 拢500 balance in current account and any surplus is automatically swept to a deposit account which pays a reasonable interest rate. That 鈥渃osts鈥� me about 拢25 a year in lost interest, but in reality rather less because it would have been taxed: an annual fee would have to be paid out of taxed income and would undoubtedly cost me more. In addition internet and telephone banking have made it very easy to switch funds which are not earning enough interest into instant access e-accounts which pay very good rates. In truth, anyone who keeps substantial amounts in a current account has only himself or herself to blame.

I agree that the banks make outrageous charges for using plastic abroad, as do mobile phone companies for foreign use. They get away with it, in part, because there is no effective competition from the currency exchanges, which impose quite unjustifiable exchange rate spreads (between 5 and 10 per cent even for stable major currencies) and charge commissions on top, often making plastic ATM withdrawals a cheaper option.

There is a very easy way around the penalty charges point, which is what I think the banks will do if forced.

They will introduce a fee for each transaction: cheque, cash machine withdrawal, balance enquiry, whatever. Given that these are agreed fees (and not penalty charges they can be whatever the bank choses)
拢5 per cheque, 拢10 per withdrawal - whatever they like. At any rate they will be substantial.If the customer doesn't like it he can shop around.
Penalties for going overdrawn however will be reduced such that they are reasonable (and unchallengable).

The Banks will then offer an incentive each month (or quarter) to those customers who stay in credit, in the form of a rebate of all charges ie in effect still free banking.

Those who have gone overdrawn, though won't get the rebate and will be left to pay the substantial agreed fees. Which are legal and unchallengable, because they are clearly fees and not penalties.

Very true, I have no idea about how much I am 'charged' for day to day banking services. As far as I can tell there are also huge differences between banks. For example, Nationwide is one of the few banks that do not 'load' (i.e. charge) overseas spending on their cards, but you cannot easily tell from your statement what differences there are.

I'd like to see part of my statement detailing these charges. For example, on overseas spending you could be told the total amount spent at time of purchase and the actual amount debited from your account. Maybe for interest you could be told the potential amount earnable if invested at base rate and then the actual amount given.

Most people would not be happy paying for something if they weren't told how much money they would have to give, and yet this is what we let the banks do.

Ah yes, why let the truth get in the way of a good story? the truth is that most of these 'highly profitable' banks make the najority of their money from their activities in capital markets, investment banking, etc. One of the largest retail banks in this country makes only 7% of its total revenues from its retail arm - with a huge 48% coming from its investment banking division. This picture is reflected across most of the banks active in the UK.
As has been mentioned, Nationwide provides excellent products and services, people are not forced to bank with the giants.

I like many have a fairly boring account which attracts a certain number of direct debits, standing orders and a limited number of credits. These are more or less the same year in - year out. If the bank with its little abacus cannot use the credit in some way to provide free banking then I'm going back to being paid cash - it's really no skin off my nose.

The argument some people are using here, that it is simple to stay in credit so why should they be charged for other peoples mistakes, is a ludicrous one. Of course it is easy to stay in credit if you have a steady income and take care of your finances. However, not everyone *has* a steady income, and the charges banks give them only makes matters worse. As an example; I used to be self employed, and, like many others starting a buisness, had to keep a close eye on my finances. It all came unstuck, however, when a cheque from a client bounced. As this was for a considerable amount of money, it meant that I dipped (briefly) past the agreed overdraft limit. This meant I was charged, putting me further into trouble, making it more difficult to get back into the agreed limit. Of course, all of the time I was struggling to get back out of the problematic situation I had been put in by someone elses lack of foresight in their finances, the bank was charging me, making it ever more difficult to sort out.

So as you see, bank charges dont just affect silly people who cant handle thier finances. It affects startup buisness's (mine would certainly have failed because of this were it not for friends financial aid). It affects people on limited income, such as single parents. It basically means that if you get into financial difficulty, for whatever reason, you are more likely to stay there.

Would removing free banking help this? Of course not. But I dispute the idea put forward by the banks that without bank charges, free banking would be impossible. Like Mr Preston points out, we have some of the most profitable banks in the world. Free banking without grossly inflated charges may dent thier profits, but I sincerely doubt it would put them in a loss.

The banking code, which every major high street bank has subscribed to, states that Banks should have complete transparency in what they do, so surely it should be quite easy to contact your bank, and ask them why they charge what they do.

Or so you would think

What happened to the old idea that banking consisted of borrowing money from one bunch of people (depositors) and lending it to another bunch of people (entrepreneurs)?

Assume 5 million customers, each with an average balance of 1000 pounds. That's 5 billion pounds, much of which can be invested at a good rate of return. Call that rate, say, 10 percent. That represents 500 million in revenue right there.

Of course, 500 million is chicken-feed to the big banks, which expect to make billions in profit every year (and thus need far greater amounts of revenue). But I still think a well-run bank should be able to earn enough by investing depositors' money to cover the costs of running their accounts. The more so as it is all computerized nowadays, and computer equipment is getting cheaper all the time.

Banks have been stealing from us for years, this isn't surprising. If banks make so much money from all their other arms, why do they feel the need to charge me more than I can afford when I go into debt (do they honestly think I want to?), and to not immeadiately clear my pay cheque (which I feel is simply theft). I'm on minimum wage, why do I have to wait to be able to live, whilst the exeuctives are earning in a day, what I earn in a year?

These articles often shock me that people feel that they have a "right" to free banking. At the moment in you can stroll into a bank, demand that they pay a company a certain amount on a certain day (SO's & DD's) and expect that to happen without actually paying a penny for that service.

Then when people for whatever reason people cannot cover a direct debit the bank rightfully charges them a penalty fee for failing to keep their part of the deal. People need to take responsibility for their actions, manage their accounts properly (and every bank goes out of their way to help you do this online, in branch, over the phone e.t.c) and they wouldn't get charged - it is as simple as that. (It's not the banks fault that people spend outside their means!)

And yes, I do agree that charges are profitable and almost certainly allow bank accounts to be free, I would much rather that my well run account was subsidised by these people so I support charges completely.

I'm sure that as my comments contradict most and you have probably come to the conclusion along the lines of "I have enough money and don't understand the impact of a bank charge" however I am a self financing university student living away from home; if I can manage my account without being charged why can't 1000's of others who are in financially much better position than me?

I think there are several points where your entry differs from the experience of those of us who live in the real world rather than 'media-land'. Firstly, something described as a penalty for breaking terms and conditions should be just that, a serious deterrent.
You state that British banks are the most profitable in the world but fail to mention that the figures quoted by the media are before tax values and so include the amount creamed off by the Treasury from the initial profit and the shareholders dividend. ( By the way, where do you think research and development money comes from? ) Also most of the profit comes from their international operations and is the only thing stopping this country being bankrupt as it pays for the massive deficit on trade in material goods.
Finally you talk about the interest lost on current accounts. If I want interest on an account I'll put the money in a savings account as a current account is simply a storage place instead of putting cash under the bed. In historical terms interest on current accounts is a VERY recent idea!

I have experiences with banks in three different countries: UK, the Netherlands and Germany. Of these three banking systems, the UK one was the worst.

One gets charged for far too many things, the attitude towards cheques (obsolete in large parts of the euro area, thank god), credit/debit cards and accounts in general would best be described by the word medieval. Quite possibly, the way the banks operate in the UK is about as silly as the system they have in Italy. And that's saying something...

An example, an international transfer can be done online at no extra cost (apart from exchanges rates, if applicable) in Holland or in Germany and it takes about 3 working days before the money arrives at the other end.

With my UK bank, Bank of Scotland, I'd have to go to my branch, give them the details, pay 18 quid and it would take up to two weeks to come through. And it turned out, that this was quite possibly the best deal in the UK...

While I applaud the OFT for investigating the charges that banks levy, some charges are an absolute rip off. I'd rather that the banks make these charges against people who cannot manage their account responsibly.

In my 15 year of being with my bank I've yet to pay a single penny for any service on my account and never had any penalty charges. that means I've had free DD / SO / Cheques / access to online banking etc..

My current account never has more than 拢500 in it on average, everything else is regualry swept to ISA / Savings accounts managed by the same bank.

Every dealing I've had with them has been nothing except courteous, and any problems I've had rapidly resolved. I think it's worth me losing a little bit on interest for that quality of service.

Yesterday I went to my bank to pay in a cheque and the counter clerk asked if I would like to change my current account to a different kind. I asked if there were charges, she said yes, the cheapest would be 拢2.00.

I said no way, my account does not attract charges and I earn over 拢4.00 a month in interest. I do this by paying bills at the end of the month so cash which would not have gone into savings anyway is earning interest in this account.

The clerk then said I would have free mobile phone insurance and travel insurance. I have these anyway so I thanked her and walked away.

I do most of my banking online at times to suit me.

Why do so many people whine about the banks? They actually do a good job in acting as a channel for payment and as a place for secure storage of wealth. They are NOT public services or philanthropic societies. If you want to do everything in cash, go on; keep the money under the mattress and carry pockets full of change and notes everywhere you go. I manage my account online and have the sense to check before I go overdrawn. It's only the foolish, the inveterate spenders and the plain stupid who get themselves into positions where they go overdrawn and then whine about bank charges. Try getting stuff from a shop when YOU haven't got the cash - because that's exactly what you're doing when you use the 'unauthorised' overdraft. I do not work for a bank, but respect what they do for their customers. I suppose all the whining is to be expected as it seems to me that most of the population is completely feckless and thoroughly disorganised.

I welcome the OFT's study into bank charges. But why has it taken so long? When the banks collectively make tens of billions of pound profit each year, money that comes from each and everyone of us, clearly an investigation should have taken place some years ago. I'm not against reasonable profit....but charging 拢30 for a 拢2 transaction is no different to unscrupuluous money lenders who charge 30% or more to borrow money. In fact it could be argued its much worse!

I personally use one of the big banks, and need to keep a staggering 拢4,000 in the account to avoid bank charges. But to pick up on Robert Preston's point, at a reasonable rate of interest, lets say 5%, I'd get 拢200 gross (拢120 - 拢160 net) interest if invested elsewhere. In return, the bank gives me AA membership, free annual travel insurance and many other goodies. Therefore I have gained, because I save about 拢200 a year on these two alone.

I also have a Nationwide Flex Account and credit card which enables me to avoid unnecessary charges when travelling abroad. If you haven't looked into it, this is a definte must account and card!

Although, I am very keen to see the outcome of the OFTs study, hopefully to address the inequity of charges, the key message must be to customers and banks that responsible banking will not be penalised ureasonably.

Perhaps I'm being niave but being a student in the lucky situation of never having to use an overdraft facility and always paying my credit card in time, my bank account resembles a high-tech piggy bank for the most part and so it seems, at least, to be free banking.

It is actualy quite easy to work out the interest you are not receiving on your account. Take your monthly salary, subtract anything like mortgage payments that goes out in the first few days, then divide whats left by half to get the average balance in the month. Times that number by 12 to get an annual average balance and then times that by the difference between the % interest you think you should get and the % rate you actually get. If you pay nothing otherwise for your banking (like most people - how many withdrawals abroad you use a year, I mean really) then this is the cost of your banking. It wont be much for most people. Dont forget to take of tax on the interest at 20% - the bank has to pay this over the IR.

Banks use our money to make outrageous profits in global markets and investments. These same banks pay ludicrous salaries to directors and senior managers (who work so hard for the banks profits but not customers

Under these circumstances of course banking should be free and we should all receive a sensible interest return on our accounts since it is our money they are profiting from. But it's never going to happen because the decision about who gets what share of the profits will always be theirs.
Did someone say we live in a democracy?

How can you possibly argue that we do not recieve free banking due partly to the fact that we receive little to no interest on our current accounts? Put it in a savings account - it's your responsibility! The account itself, the cards, cheques, transfers, internet banking, telephone banking are all free to use at a significat cost to the banks. Stop moaning about how it is in this country, you'll complain more when you have to pay your monthly fee account fee.

I switched my banking to a Building Society as I was fed up with the bank I was with constantly offering me upgrades to my account, virtually no interest and weekly offers for loans, cards, insurance etc.

I have to say the difference in service with the building society is huge - I can pop into my branch and speak to someone at almost any time and they pay great interest on my credit balance.

I'm afraid most people only have themselves to blame for doing nothing about this - if they voted with their feet the banks would soon change their attitude as the only way they will listen is when it affects their profits and share price.

My advice - do something positive about it yourself - banks will never do anytihng until they are forcd to.

Hmm. I have one of those accounts with 'added extras' that I pay for each month.

Yet, the last time I tripped past the overdraft limit (for less than 24 hours, I would hasten to add) I was still charged the usual daylight-robbery charge of 拢30 for the privilege.

Yes, banks rip us off every which way, but then the whole framework within which they work is propped up by government and legislation that allows them to do it.

Consider this; no matter what is happening in the economy, banks ALWAYS make HUGE profits - every year. Yet any other business has to suffer the ebb and flow of the markets.

That suggests to me that the banks are not trading fairly.

Very good article.
The banks are the modern day robber barons, and the last thing they want in an investigation into there sharp practices.
I hope the OFT really hauls them over the coals.

I get derisory interest on my current account 鈥� but I don't care. My current account never has more than about 拢100 in it - the rest sits in a variety of savings accounts earning a much better rate of interest. I can top up the current account whenever I need to.

Internet banking makes it very easy to get the best out of your money. If you've got all your money sat in a current account earning next-to-no interest, you're not getting the best out of it.

I agree with those who express the opinion that they would much rather put up with the 'hidden charges' for banking than have to pay a set fee just because the delinquent members of society who aren't prepared to operate within the terms under which their account is opened don't like the charges they accrue.

I used to work for one of the 'big 5' and what no customer complaining about overdraft fees and the like seems to understand is that they are large because they're designed to be punitive and to discourage abuse of the account. What's more, occasional offenders will always get their fees refunded if they just ask. The charges are supposed to deter serial misuse of an account which the bank pays quite a lot of money to operate (free statements, cheque books etc.).

In response to Brett Thorburn's comment, I'm afraid he is mistaken. He is incorrect in believing that the payer of a cheque is debited the day the payee deposits it. The money is not in a 'slush fund', it takes three days for the cheque to be sent from the depositing bank to the drawing bank and for the funds to be transferred back the other way. Yes that's an archaic system and yes I'm sure it could be done much more quickly in our modern age but that is still the way it is done. The money isn't sitting anywhere making the bank interest.

I am with one of the big five, I have two current accounts (main, cash card), and one savings account with my bank, the main account pays something like 4% a year, the cash card account never has more than 拢150 in it (so the bank cannot be making any money from that one). My savings account pays 8%.

They offered me a good fee free, free legal fees, three year fixed interest deal for my mortgage.

I had my debit card cloned (pre cash card account days) and was credited the stolen 拢450 within two weeks.

I'm sure that if I were to work really hard I could get a better deal, but my time and peace of mind are worth something too.

I like my bank. If my custom is actually making money for them - good luck and I hope things stay as they are.

Why shouldn't people be penalised for unauthorised overdrafts? They are using money that isn't their's without the consent of the owner of the money (i.e. the Bank) - effectively they are stealing it.

Our banks are also huge global organisations their profits don't just come from running our current accounts - despite what some media might make you believe.

That said education on financial matters in the UK is hopeless/non-existant. Better informed people make better choices.

To be honest the OFT investigation is just another one of those "It's not my fault it's theirs!" type of investigations.

Going into the Red or over extending on your credit is the individuals fault. Not the banks. Bouncing checks is the individuals fault, not the banks!

So please, leave free banking alone and let's put responsibility where it should lie. In the hands of the individual!

There are plenty of banks around that offer very good interest rates on in-credit accounts. I use an internet bank which offers 3.75% on current accounts, and 5.25% on instant-access savings. I don't find that I miss any of the branch-based "services" of ordinary banks, but I have kept an account with one of the big-5 (which I keep in deficit, within the interest-free overdraft limit) just in case I do need something else.

So the competition and choice are out there, and I don't see any problem with the big banks having very poor products: if people choose to stick with them, that's their choice.

"Free banking" or banking without direct charges if you stay in credit seems only to exist in this country. When you talk about forgoing interest on current accounts that assumes you could put them somewhere you would get a rate. It has seemed to me recently that current accounts with significant rates are becoming more common and internet sites now help you compare and pick.

I find it bizzare that we think we should get truly free banking. Do people thing Banks do this for fun? They have no obligation to provide you with current account facilities

I purchased quite a bit of gardening equipment at B & Q in Ireland with my UK credit card. Unfortunately, despite waving my 10% discount card under the cashier's nose, he still put the transaction through without giving me discount. When I pointed this out he arranged for Customer Services to sort it out. They refunded the relevant part of the transaction (no discount given on special offers) and put it through again with the discount, which amounted to 93 euro refund. When I received my Credit Card statement it showed the two transactions with only a difference of 拢29. Thank goodness B & Q didn't refund the whole transaction otherwise I would have had to pay an extra 拢48 over and above the original transaction. When I rang my credit card company I was told it was probably due to exchange rates. I pointed out that this all happened in the space of 30 minutes on the same day. Now I have to put all this in a letter to them explaining the error and they will put in a claim to Visa on my behalf (It wasn't confirmed that I will get more money refunded). In future if this happens again when I use my UK credit card here in Ireland, I won't accept a refund from a merchant, I'd rather have a credit note! Incidentally, if I apply for an Irish credit card I will have to pay 40 euros per year Government Tax per card.

I put up with the loss of interest on my current account in return for no fees because it's relatively painless. If they paid a higher rate of interest and charged a fee, you can bet that by the time the chancellor has his share of the interest, what's left would be less than the bank fees. I can say that if I got a letter from my bank informing me that they were charging a fee, they'd get a letter by return of post closing the account. This is the only way that consumers can put pressure on the banks - it worked with ATM fees a while back, although it's interesting to note that such fees have sneaked in again (not that I've ever used a fee-charging ATM in the UK).

Jay G, The banking practices should be made to protect the least organised and least efficient of banking customers. With your thinking, citizens of the UK would never need police, the army or the trash collectors. We'd all be so efficient at running our lives and the world around us. The purpose of the banks is not to educate customers to be efficient and competent. But I applaud you and your family for all of your well oiled and smoothly running competence.

You have forgotten one very important fact: the banks use our deposited money to earn great interest from loans to other customers. Isn't this a sufficient profit? As a foreigner who receives his salary in a foreign currency, Lloyds charges me an addtional 3 pence for every pound that I buy over and above the spot exchange rate...then an additional 8 pounds as a fee for their trouble. In addition, I pay 10 pounds pr month for my current account.

I just received a notice in the post that in my country, a class action suit is being made against one of the country's largest banks for unfair charges made for foreign transactions. That should happen in the UK.

Unfortunately I bank with Nationwide. They don鈥檛 charge me as I don鈥檛 breach the rules on overdrafts. They also pay good interest on the account. Not that I use it as I sweep money into the esavings account, which pays excellent interest.

It is interesting that you think bank charges are excessive when terms are breached.

What would happen if you ran your mortgage account by breaching rules? Would repossession be excessive ?

What about not paying council tax?

You understand my drift.

I will be unhappy if I have to pay a charge so people can break rules on the cheap.

Alan Harrison

Pam Atherton and some of the others appear to have misunderstood the issue here. The 'delinquents' are not suggesting that those fortunate enough never to slip should be subsidised by the 'good' customers. It is the opposite - that the good customers should not get their 'free' banking based on the money the banks make from the delinquents. The latest offering from the banks to the OFT is pretty close to a shot-in-the -foot admission that this is what they have been doing.

Evryone should pay equitably for their banking services - whether by direct fees, low interest on credit balances or whatever - not by levying unfair penalties on the most vulnerable

Isn't the root cause of all this angst the fact that consumers irrationally expect a completely different sort of relationship with their bank compared with (for example) their supermarket?

I know that every item I put into my basket at Tescos will have to paid for when I get to the till. Fair enough. If I feel something is over-priced or is available cheaper elsewhere, I don't buy it. If I can't afford something, I don't buy it.

With banking, I can, if I take care to behave in certain prudent ways, get lots and lots for free. If only Tescos worked in the same way!!

If I took something from Tescos which didn't belong to me and which I hadn't paid for, I should expect to end up in Court. But do the same with a bank (we seem to like giving it the name of "unauthorised overdraft"), and current opinion says I should harangue my bank for reimbursement when it charges me!

What a strange world we live in!!

Let's not forget the other hidden charges.... Yes our personal banking may be free but every time you pay a business using your debit card then a fee (typically 20p) is skimmed off the transaction by the bank. For credit cards it is approximately 2-3% of the value of the transaction. The companies who take payments by direct debit will also be charged a fee to access this facility.

Of course, this fee is ultimately reflected in the price of the goods of services that are being paid for - and thus is borne by the consumer (even after taking into account that these fees may often be cheaper - to the businesses concerned - than the costs of handling cash)

Whether we look on our banking as 'free' or not the fact remains that the banks make HUGE profits and they are generating them somehow. It is the LEVEL of profit that I have a problem with, not the fact that they are making one. Threatening to make us pay for services if they are forced to remove outlandish penalty charges is simply a way to ensure that their obscene profits are not eroded

At the moment, those who run their accounts badly get charged and subsidise my free banking.
After this 'triumph for consumers', I lose my free banking (which I get for running my account responsibly) and end up subsidising those who can't or won't.
This is not a good outcome.

A number of very simple points (although some rarely presented by the media):

1. Banks are businesses with shareholders (including most people in the UK with pensions) who expect a return on their investment - i.e. strong performance

2. UK banks enjoy large absolute profits primarily because they are very large scale operations - NOT because they are making excessive margins

3. The cost of providing banking services to retail customers is significant

4. Low interest rates charged on credit balances is one way of charging for these services; fees is the other way

5. It is not unfair that people who break contractual arrangements should pay penalty fees. This arrangement is made very clear in Terms & Conditions documentation

6. There is plenty of competition in the market; the fact that customers rarely change their account is a sign of apathy (generally indication of a lack of problem) not lack of competition

7. This issue attracts too much attention because a) the media like to make a story out of it, and b) the OFT needs to justify its existence; neither of these rightly justifies the spending of more public money on the issue

8. If you really are unhappy with the services you receive 鈥� change your bank account. Voting with your feet is the most efficient way to regulate any businesses

9. Nothing in life is free

A point that everyone seems to be missing is that banks do not make most of their profits from charges on individual accounts, they make it from investing their customers money in a variety of ways, shares, currency, private equity, corporate lending, mortage lending, credit cards etc etc.
Imagine if everyone in your street gave you their salary once a month, and then slowly drew it back out from you. You would probably invest that money somewhere, so that each month you would make a profit from doing nothing but holding on to it for them. Multiply that by millions of salaries and acess to some high earning investments and you will see that banks can and do make massive healthy profits from us all, they don't need to charge us as well.

Excellent (and very timely) article.

However, can I broaden the issue that you have raised to include the fact that we can't port our bank account numbers between banks? The heavily regulated mobile phone market has been forced to do this (quite rightly) as it is a barrier to movement. We worry that by moving banks, our salary and bills may get lost and we would face unpleasant consequences - stress, loss of money, anxiety etc. Yet if we had portable numbers, all this could be avoided.

The fact that we can't move account numbers underlines your point that the banks have a very conducive trading environment and their protestations should be taken with a pinch of salt.

I'd certainly like a little more transparency about charges. I wrote to a number of banks recently to try to make an intelligent comparison of using credit cards abroad, and none would tell me what loading they apply to exchange rates. But apart from that, I am very happy with most of my banking services. My two main banks have UK-based call centres, with no "press 1 for X, press 2 for Y..." systems, as well as user-friendly online services. As far as I am concerned, those who exceed agreed overdrafts are stealing and SHOULD pay a penalty charge. It;'s not their money - why should they expect to be able to use it as they wish? Until recently, I also had an account with an American bank. Indian call-centres, near-zero customer service, and you need to keep equivalent of 拢2000 credit to avoid a charge. I closed the account when they decided to add a 拢20-a-month charge to that package. On the whole, I think the UK system comes under the heading "not broken".

Its a fair point about so-called free banking - obviously it can't be free - how could a large branch network be provided for free - but I would contest the assertion that having a visible tariff makes customers lives easier - you only have to look at mobile phone tariffs - do most people really know what their mobile phone bill will be month to month ?

The benefit of the present current account charging arrangement is that I am able to influence what I pay - if I choose to keep as low a balance as possible in my account then I get charged an incredibly low amount a month (less than 拢2.50 assuming I keep 拢500 a month on average and a base rate of 5.75%) and for that I can log onto internet banking as much as I like, phone call centres as much as I like, use branches as much as I like. As all the banks charge in this way people can make decisions on switching purely based on service rather than trying to make complex price/service trade offs

The real issue on all of this has been a headline grabbing campaign led by the media and consumer groups to get a small number of people refunds for doing what they had agreed not to do in the first place - and the impact of this on the rest of the population will now be felt.

I think you've picked the wrong target here.

I get "free banking" and it certainly is free. I get 4.5% interest on my current account, cheques paid in are credited the same day and money is moved swiftly between accounts by internet banking.

Of course it is possible to get a poor deal from one's bank - just like any other service - but if one takes the trouble to shop around and understand the product you are buying, free banking does exist.

You do know that a well run Bank Account, is a loss leader? On average a current account that is kept in credit cost's the bank between 拢50 and 拢100 per year to keep open. Of course it may seem like the banks rip us off when we go over our overdraft limit, but the truth is that customers with poor money management keep my account free

There are a lot of things that I disagree with the banks about (Outsourcing Telephone Banking abroad for example) but I think if we aren't careful by forcing removal of unauthorised overdraft fees we may get more than we bargained for.

When I withdraw money from an ATM, no matter which bank owns the ATM, the funds are withdrawn from my account immediately. But when I use my on-line banking to transfer funds to my daughter it usually takes 5 days for the transfer although, again, the funds go almost immediately.
Where does the money go?
Clearly banks "talk" to each other electronically but humans [for profit] intervene to slow the process down.
This cannot be fair.

There's one major high-street bank that pays decent interest on current account balances, doesn't charge for overseas cash withdrawals and (in my experience) makes transfer payments in 2 business days rather than the industry-standard 3. Funnily enough, they're the only major player that doesn't need to pay a shareholders' dividend.

I don't work for them, I'm just a satisfied customer, and I fail to see why people who complain about rip-off banking don't just switch. I think it's consumer apathy more than complex fee structures, that allows banks to get away with excessive charges. You don't need to be a financial genius to figure this one out!

I switched to my current bank some eight years ago after their predecessor insisted on using an automated central processing centre then messed up series of routine issues, and then finally miss-sold me a product. Yes, my current bank has made a couple of mistakes over the years (including a doozy of about 拢2500!), but they pulled out all the stops and fixed those mistakes which is why I stay with them; to err is human, to forgive divine, and to knuckle down and fix the problem is called customer service.

However, I recently wanted to put a few thousand away for use in the summer. Instead of putting it into my 鈥渉igh-interest鈥� account for six months, earning myself a spot of interest, I put in into the Premium Bonds instead. Better odds than the lottery, and I might just win the big one. Even a few hundred would be better than anything I could earn at any bank you could name and there are no hidden charges.

Another issue which should be looked into by the OFT is the amount of time which banks take to transfer monies paid by customers using credit/debit cards when making a purchase. The monies leave the customer's account immediately but it takes several days for it to be credited to the business account. This is particularly harmful to small businesses who often have to wait several days for the monies to be credited and can become overdrawn as a result. they also have to pay for the privilege of having a card machine which is a double insult.

I don't get what the big fuss is about. So what if it costs money if your account goes in the red. There's a simple solution: don't spend or withdraw more money than you have available in the account.

And yes current accounts have poor interest rates. Again, there's a simple answer: put your spare money in an instant access high interest savings account. Online banking makes it effortless to move money around.

If all this fuss carries on, banks will end up charging the entire customer base just to cover the costs of customers who are disorganised. Take a look at some of the banking services available in other countries and you'll realise just how lucky we are!

I worked for a high street bank in the 90's and in the early days they used to charge quarterly getting a report from head office detailing actual transaction charges, we would then have a figure which had to be added to achieve our targets. Charges would be bumped up by as much as 拢300 if a client was not liked or they were a nuisance. When charges were queried we were told to explain that it was almost impossible to calculate and that they were like a taxi meter clocking up charges as soon as you went overdrawn.
Also I have a high interest paying account but it restricts this to 5k max balance and they charge a fortune for buying currency using my debit card if you don't use them as they see it as a cash advance, of what my own bank balance and the irony is that they even charge at the post office who act as their agents.... farce

Some truth/veracity in both sides of the argument, the student who manages is accounts well has a point, people who abuse their accounts should not have the same rights as people who take time to manage theirs. On the other side of the coin Banks patently dont reward those people. Thats why we(wife & I) use them as a parking lot and use acredit card to pay all our bills that pays up to 3% back dependant on transaction type. No doubt that the Banks are not trying hard enough, but apathy rules sadly. But not in our house.

With the current free banking taking place at the moment, the banks are publishing record breaking profits.

Now they want to add to this with fees. No way.
I moved from RBS to A/L last summer, 60x interest, I've not looked back.

18 above talked about being paid cash only. Many Companies will surcharge you for not using a Direct Debit. Catch 22 I think. be warned.

In any business banks being no exception customers should expect to pay on an accurate and fair 'cost to serve' basis so should you demand services you pay for them and not inflict all customers with an overall monthly charge. Shop around and you can get some good interest on current accounts up to 6.50% AER with the one I have changed to!

Personally I think the banks WANT 鈥渇ree banking鈥�, as it exists today to disappear.

With the introduction of telephone, mobile and especially Internet banking the majority of people have a lot more control over their finances and are incurring less penalty charges. Additionally there is a lot more information on the Internet about financial products and personal finance management. The bottom line is the major banks realise that they can鈥檛 sustain, yet alone increase current profits by continuing to charge for current accounts in the way they do today.

This is why bank penalty charges have been going up so much recently and have started to cause public outrage. Banks can continue to generate increased profits with higher charges in the short term. But ultimately they know that is unsustainable because the higher the charges the more aware bank customers are of them and the more likely customers are to avoid them.

Therefore the ultimate goal of the major banks is for the OFT to rule that many of the existing bank charging structures are unjustified and must be reduced. This ruling will play right into the hands of banks, who will simply start charging all customer for holding a current account with them.

Overdraft fees, foreign money charges etc will all reduce a little but ultimately the banks will make much more money from charging customers small fee鈥檚 on holding and using the day to day services (e.g. ATMs, cash transfers, bank statements) of a current account then they have done recently from penalty charges, foreign money withdrawals and the long held tradition of low interest rates on current accounts.

It wouldn鈥檛 surprise me if the major Bank themselves were largely responsible for pushing the subject of high penalty charges on current accounts into the public spotlight. This after all would be the most expedient way to bring about the necessary changes to current account pricing without the major banks appearing to be operating as a cartel or accused of price fixing!

Previous comments about people being apathetic to change banks is right. I changed from Nat West to Alliance & Leicester. The result? A one year savings account at 12% and a current account interest rate of 6%. Changing was simple. Go on people, get off your bottoms and move. Take control.

I do not understand where some people get the idea that by keeping thier own account in credit balance they are somehow subsidising people who do (sometimes through no fault of thier own) go overdrawn either with or without an agreement.

You subsidise nothing at all. The banks make billions in profit through the illegal penalty charges. Even without that they would still make huge profits from all the other little scams they run like holding deposits overnight but debiting accounts immediately, taking 3 days to proc ess cheque transactiosn ater debiting the other persons account in a fraction of that time.

If the government hadnt gone to such efforts to make it practically impossible to survive without a bank account many people would be so much better off without them.

I think the big banks have had it too good for far too long. Any bank which closes a customers account, because the customer has claimed unfair fees back, should be named and shamed. The bank in question should be forced to pay substantial compensation to the customer and reinstate the account. The big banks act like loan sharks and provide a terrible service for the high cost.

In response to Tom Vincent's comment @ 12:07pm, of course Tom they offer Free banking - the banks do it out of the goodness of their hearts and make no profit from doing so - wake up!! Obviously a bank employee - change the record!

How I agree with Julian Ferguson. Having lived in Belgium, a country the British love to sneer at, for many years, in my opinion their banking system works very much better, and seems to be less expensive, or at least more transparent.
Their internet banking is streets ahead of the British equivalent, with far more services available, while cheques, and their alleged clearing time, have for all intents and purposes disappeared, their role being taken by credit transfers.
And then the cost of international transfers! Barclays charge 拢20 for any such transaction, however small. ING Belgium do it for free, it's quicker, and I can do it from home using my computer.
It's another world.

I'm in agreement with the minority of people here who think banks give really good value for money. I very rarely go into my overdraft - when I have overspent above that limit before, I called up the bank and they very quickly sorted out a higher limit so there were no charges other than interest. The only fee I've ever paid was for a bankers draft.

It's an industry that probably made better use of technology than any other to drive down costs, and this has allowed banks to be very profitable.

I use Direct Debit for most bills and when I think about the complexity of shuttling that money everywhere, giving me access to it at any cash machine and online, providing branches in high streets, I'm quite impressed they can make profits on the slice of interest they get from my money.

In response to Nathan's comments:

"For example, Nationwide is one of the few banks that do not 'load' (i.e. charge) overseas spending on their cards, but you cannot easily tell from your statement what differences there are.

"I'd like to see part of my statement detailing these charges. For example, on overseas spending you could be told the total amount spent at time of purchase and the actual amount debited from your account."

Erm, they do. I made a couple of purchases and ATM withdrawls using my Nationwide cards in Prague at the weekend, and my statement already shows the transaction in GBP, and the exchange rate that was applied as part of the narrative... And it's a more competitive rate than some of the bureaux de changes were offering!!

Like mobile phone contracts, banks prey on the lazy. If you can't be bothered to move spare money from a current account into a savings account then you will lose. If you don't bother to keep upgrading your account you'll get less interest and offers. If you don't bother to arrange an overdraft or get a loan then you'll be charged loads.

One factor which is always overlooked when complaining about the banks is the huge cost they have to bear in both regulation and security. If you don't want to pay charges (which I don't - I use the excellent free internet banking service to stay on top of my money)then you can always go back to keeping your cash under the mattress...

I fail to see the problem here. Of course banks are going to try to make as much money out of customers as they can - they aren't charities! Rather than whinging about the amount of profit the banks are making, just buy shares in them and be glad. In fact, if you have a pension, you may well already own shares in the major banks without realising it. Be proud that our banks are some of the most profitable in the world!

Some truth/veracity in both sides of the argument, the student who manages his accounts well has a point, people who abuse their accounts should not have the same rights as people who take time to manage theirs. On the other side of the coin Banks patently dont reward those people. Thats why we(wife & I) use them as a parking lot and use acredit card to pay all our bills that pays up to 3% back dependant on transaction type. No doubt that the Banks are not trying hard enough, but apathy rules sadly. But not in our house.

It's easy to say only the stupid get overdrafts. Last night, I discovered that a direct debit I had set up had gone out early, with no warning ( a clear violation of the direct debit guarantee) pushing me into my overdraft, and automatically generating charges (luckily I'd managed to get it back in time). Last year a cheque I'd written 3 months earlier (and had therefore believed cashed) cashed unexpectedly - sending me into the red. I've had councils take a full year's council tax instead of a months, I've had direct debit's that I believed cancelled, but that the bank had forgotten to cancel go out - and I get a charge each time. I once had was charged twice on the same overdraft because it carried over my statement date - one charge for being overdrawn on my old statement, another charge for being overdrawn on the new one (I was overdrawn a total of 2 days). It's very easy for banking mistakes to send someone into the red, but not so easy to get the charges repaid.

Ok so you have made some good points, but I fear nothing good for the vast majority of people will come out of this.

I can remember the time when I paid bank charges every quarter, they were expensive even 35 years ago. So I used to issue one cheque for cash each month and have just one Standing Order for my mortgage to ensure I kept any charge to a minimum. I paid all other bills by cash. Credits were free!

Think about how you could do that now, the way we are all used to not having to carry cash, are forced to pay bills by Direct Debit or pay a premium for the privilege etc. My statement is always more than a page long. Just look at the average transaction charge for small business accounts at 30 to 50 pence per item and most do not pay a good rate of interest on them either.

Yes Banks take liberties, the one that irks me most is the clearing system, the debits can always miraculously be same day but credits are always, apart from some inter account transfers 3-4 days to clear. Over all though I get a good service: I do not allow my account to overdrawn without arrangements being in place; I keep the balance as low as possible, so I think the amount I pay in lost interest is fair payment for the service. Also I would not want to put my money into a bank that was not very profitable and sound, Banks not making profits do go under, and it is devastating for customers.

I have 3 accounts and 1 credit card with a telephone banking company. Why when I transfer money from anyone of my accounts it goes immediately from one to the other. But if I transfer money from one of my accounts to my credit card it takes 4 days to clear. Yet it is within the same bank!

Well, I have not paid any bank charges on day to day banking for 21 years. I do not go overdrawn and I move money into a linked savings account when I have excess in my current account, moving it back in when the direct debits are due. And I can automate all that using internet banking.

If I want the convenience of using a credit or debit card abroad then I don't have a problem with the bank charging a fee - as I would pay for converting cash to a foreign currency.

If some people, for whatever reason, go beyond an agreed overdraft limit then why should I subsidise their costs? It's their problem not mine.

Maybe if the banks were instructed by the OFT not to allow unauthorised overdrafts then some of the allegedly "outlandish" charges could be removed! But then we'd see complaints about the inflexibility of draconian banks, etc. etc. etc.

I guess I'm in a catch 22 here. I receive 'free' banking on my current accounts, I don't overdraw, I don't have credit charges or penalty charges but I get next to nothing in interest. But...

...since the early 1970's when I started my military service I was 'forced' by my employer to use a bank. Since those days I have had several employments where my employer has demanded the same of me.

Therefore WHY should I have to pay charges when there are very few 'safe' alternatives available and my employer is the one that insists on me having a bank account?

Regards
Gordon

The question is asked, how much do I pay to have a bank account? I think if I worked it out they may well 'pay' me. Why? Because I've never had a penny's bank charges levied against me ever. I clear all but 拢50 to an interest bearing account and I use my credit card all the time, paying off the balance in full.

It really irritates me when people complain about charges levied when it is clearly set out in the term and conditions what the charges are and when they are due and it is possible to avoid them. Ok sometimes something goes wrong, but that can be fixed. So what if the 'charge' exceeds the 'cost' if the charge is clearly known before the errant transaction is made then the charge is properly due.

P.S. I also get about 拢200 dividends a year from shares in a couple of banks -so thanks for that!

My banking is essentially free. I never keep large sums in my current account, but I ensure that I am never overdrawn. I use a credit card to buy almost everything and I always pay off the credit card balance in full each month. I subscribe to the now seeming old fashioned notion that if I can't afford it, I don't buy it.
Any changes in the system of banking charges will penalise those, like me, who show financial responsibility and will offer advantage only to the feckless.

A bank is run for it's owners, the shareholders.

A building society is run for its owners, the people that hold accounts.

Sometimes it's as simple as that.

It's a shame that credit unions and cooperatives have all but vanished from the UK.

If banks do start to charge for banking services then the OFT won't be to blame. It will be down to all those irresponsible and lazy people who have taken it upon themselves to complain about their previous bank charges in order to get some quick cash without considering the consequences. I understand that in some cases people have been unfairly charged, but the majority have simply been charged in accordance with the terms and conditions they signed when the account was opened. Whether the amount is fair or not, these people had a choice to avoid the charges like the rest of us by keeping their finances in better order.
At the end of the day you can call banks robbers and thieves, but if it becomes too hard and too expensive for them to do business they will stop. And we know where less competition in the market place leads.

I don't want a bank account! I only have one because everybody insists on being paid by direct debit! I'd sooner be able to prepay for everything! Yes I have been overdrawn before and been charged an extortionate amount of 拢39. Luckily for me the bank made the error paying a direct debit that had been cancelled so gave me them back. HOWEVER when their machine didn't give me 拢250 that I had tried to withdraw but took it from my account I had to wait TWO weeks for that money to be returned to me while they reconciled the machine. Surely it doesn't take two weeks for someone to count it or read the printed report?! I needed to have an overdraft facility here - and they charged me for it, until I stood in the branch and complained so all and sundry could hear it - they waived the fee then! They're good at making sure they are alright and while my account has been in credit they are great. As soon as things go pearshaped they do not know the meaning of "help".

I have previousley worked in the banking sector, in a high street bank in fact. And believe me I am one of the most cynical people around

BUT.....on this matter, I am driven to distraction by the rubbish that some people write, totaly un-thought through and makes no sence at all

Banks pay little or no interest on caurrent accounts. this is very true, BUT if you think about it, you get an account for free, cheque books and processing, for free, visa/switch debit cards and all the flexability they give, for free, a branch network you can go into, for free, ATM machines and their use, for free, the ability to walk into any branch in the country and withdraw all your money, for free, direct debits for free, standing orders for free, I could go on and on. It does cost the bank money to run basic old style current accounts, so why should they shoulder all the cost of it?

People go overdrawn WITHOUT PRIOR AUTHORISATION, it is in all essence, to me, stealing. I mean if you went into Tesco and just took a weeks shopping, how far would you get??. So why should the banks not charge a decent fee for that, people take liberties. If you dont want to suffer these charges, simple answer, take responsability with YOUR account, stop being a slacker and expecting others to deal with your problems, it is not to difficult a thing to do

You want more interest, open a savings account, simple, easy access, instant access, ohh but no you would have to do some work in transfering the money accross...........

People that pay charges for accounts or have to keep a certain amount in, you have CHOSEN to have one of those accounts, and the majority will be a "value added" account, so in return for this you receive a whole bundle of extras, like annual travel insurance, AA breakdown cover and many other things. If you dont like it, change it back to a bog standard one, it was your choice to have it in the first place, you signed the paperwork

I am sorry to rant, but sometimes the way of the world these days is terrible. People expect everything for free and very few take responsability for what they have and what they do, instead expect the world and his dog to do it for them, FOR FREE

If you look at the banks profits, you see the VAST majority is made in places like the foreign money markets and a very small proportion in the branch networks

But in the end if you dont like it, go somewhere else, but for pitty sake TAKE RESPONSABILITY OF YOURSELF, you run your account in credit, you get it all for free and no charges

While I do agree that penalty charges in the UK are harsh, i disagree that the watchdog could make overall banking cheaper. I base this on the banking situation in Australia where fees are charged for everything! I found the penalty charges exorbitantly high and the transaction fees for using my card high, and the interest rate was very low on a regular cheque account.

You would usually pay a monthly fee, earn less than 1% interest on your balance, pay the equivalent of 10p (minimum) everytime you used your card, even more for a competitors money machine. Don't even ask about overseas transactions...

So, basically I think that banks in the UK are very cheap to do business with. If you want interest use a specialised investment account, and make sure you dont become accidentally overdrawn.

Things could be a lot worse...

Good article.

There is no real competition in this market - with 5 or so main banks, its a "Cartel", not an open market.

Strip modern banks accounts down to the core and its essentially a secure computer system that holds records of your funds and moves money around. Its time banking charges reflected the 21C systems.

In an open market individuals depositing money would get a opportunity benefit from banks because the bank earns money from lending the funds out. The banks' margin between lending and borrowing rate is far too wide, even taking account of their risks. They get away with by deliberate not clarifying the true cost & charges and because most of the public don't understand interest charges (why would bank want to explain the APR on Credit cards).

Its no accident UK banks are looking to expand abroad - they have very healthy profits here to spend.

I hope the OFT does its job.

I have to be honest and say here that I have absolutely no time at all for any of the banks.. Up here in Scotland we alledgedly have two of the biggest banks around with one now bidding to become potentially the biggest one certainly in Europe.. These are hugely profitable businesses with enormous cashflows.

Yet - anyone who has ever tried to raise money to start or support an early stage business will know how difficult it is due to the low availabity of genuine risk equity capital. In 06 a mere 拢6m or so was invested by the financial institutions in Scottish start-ups and spin-outs. Probably less than the average bank's boardroom salary bill.

Last year a seminar was held in Edinburgh to discuss this problem.The bank currently looking at going Dutch didn't even bother turning up.

Now of course the free market purists will claim this isn't the business of the banks but in fact one has now taken an albeit small stake in one of the smaller VCs. It's also quite common for many overseas banks to do the same thing.

I view the UK banks in the same way as I view the Treasury. They take but rarely give anything back and they are a drag on real economic growth.

Perhaps it's time to revive the mutual banking sector.

Well, Pete

You've obviously got a regular salary, which your employer pays ON TIME, you haven't lost your job or been ill by the sounds of things.

If you do ever experience some of these unfortunate life events (I hope you do)then you might find that you unwittingly go into your overdraft, of which you will be very displeased about.

And you know what, you'll get hammered and you deserve it.

Think on.

I will be watching the OFT with interest (pardon the pun). So far they have been very little help to people who have contacted them regarding unfair charges. As someone who has incurred charges I have no problem with paying for the privilage, nor would I want other people to pay for my mistakes. I do however have a problem with the amount of the charges. The banks are not surposed to make profit from them but they clearly make huge amounts of money from people who are struggling anyway. The sooner these charges are regulated the better.

Personal banking in this country is very clearly a cartel and the quicker a regulator can force change, the better.

The simplest demonstration of a cartel is that there have been no new entrants into the field for many years - all the new brands are just repackages of existing companies.

How nice to see that some people can see through all the media enhanced hype about bank charges. If you manage your account properly then you get basic banking 'free' and can transfer surplus balances where you wish.
To the chap who moaned about it being easy for people who have a regular income i would simply point out that it doesn matter whether you have regular or irregular income - thats your problem not the Banks - dont try and spend what you havent got in your account and you wont get charged, it really is that simple.

As far as the 'outrageous' profits are concerned try running a comparison of the Banks return on capital and profit percentages on turnover rations in comparison with other businesses (your own if you run one) and see if the percentage returns are as outrageous as you think.

The banks are businesses not charities

I have also worked for one of the big four banks, to which I have no particular loyalty, but I think we get very good value from our UK banks compared with the ones I used when living abroad in the US, Ireland, Germany and Hong Kong. In none of those countries would you find anything like the free current accounts (of which I have about 5 for different purposes), with free cash withdrawals, free statements, free cheque books, free branch access. I am convinced that the banks lose money on running my accounts, because I never pay any charges, and frankly no one ever needs to. I know from managing a bank from the inside that the costs of running a typical 2000 branches are nowhere near covered by any interest earned on the small deposits left by people on a daily basis.

Where the banks make money is on savings accounts, on loans (when insurance is attached), and on credit cards. And everyone should avoid at all costs the current accounts with regular monthly charges. These are promoted heavily but are not worth it.

And by far the majority of UK banks' profits come not from retail customers but from business and investment banking, and from overseas sources, which make a great contribution to the country's tax revenues.

So please let's avoid feeling sorry for ourselves! We are fortunate!

I enjoy FREE banking. I manage my expenditure against income so that I never overdraw. The amount I'm in credit earns me the mortgage interest rate as I have an 'offset' bank account. When I buy currency I rarely use my bank, I use whichever charge-free deal is going at the time. Spend on plastic abroad never looks excessive when the charge hits my account; once or twice I've worked out the equivalent exchange rate and been pleasantly surprised. If it ain't broke then don't fix it, as our cousins are wont to say.

In response to the postings querying why they should subsidise other bank customers who cannot manage their finances, it is not you subsidising them, it is instead they who are subsidising you by paying penalty charges that do not accurately reflect the costs incurred by the banks. Not only is this 'unfair', it is in my view (and apparently that of the OFT) also unlawful.

It may be very nice to be subsidised by others, but at least be clear and honest with yourself as to who is subsidising who.

And with regard to this being an issue of customers being unable to manage their finances, it really isn't as simple as that, but for anyone who thinks it is, I'm not going to explain why, but do try work this out for yourselves.

I carried out your assessment as to how much banks cost me. I maintain internet accounts all of which pay a good level of creditor interest and have very reasonable agreed overdraft rates. Any movements between accounts are same day and thus there is no loss of interest. I am aware that I loose approximately 3 days interest when paying in cheques but accept this in light of the processes needed to clear cheques. I am very careful never to go over my overdraft limit. Thus I feel I get a very good service (it is certainly free!!). If I considered that my bank did not offer the level of service (including level of creditor/debtor interest rates) I want I would move my accounts very quickly (I receive plenty of advertising from other banks so I believe the competition is there). The bottom line is that banks provide a service for which they have to charge and I would prefer if they recovered their costs through their existing mechanisms and not through abolishing free banking.

I do not know in great detail what my hidden charges would amount to, but I am quite happy with my financial arrangements. For a start I bank with the Nationwide, I know this is not a bank, but a building soc. They do pay me interest on my current account. I have a small overdraft facility where I only pay a small charge for for the actual time that I am overdrawn.(Charge has been as low as 1 penny). I have their credir card and they do not charge for oversees transactions (in Europe). I order my currency from the Post Office who do not charge a commission.
I have no standing orders and my salary is payed in direct. I don't think that I cost them much if anything to run my account, and on top of that they get to borrow my money for a very favourable rate. They are lucky I don't charge them. Their service has always been first class and most helpfull. I would not go near a "Bank" for anything. I think that they are all a bunch of conniving twisters, who try and extort as much as they can from their customers. I know, I used to work for one of them.

拢1 in 拢33 of bank profit growth is made from UK retail banking - most comes from abroad helping the balance of payments. My current account is offset against my mortgage so I save big time interest wise. I pay no banking charges as I do not go over drawn and buy travellers cheques and currency at no commission. Where are all the hidden charges that are being alluded to? Why should I have to "pay" for the people who don't obey the rules? If I don't put oil in my car and it breaks down at huge cost, why should all the other car uses who look after their cars pay for mine? Re the time it takes to clear funds - take it up with BACS and not the banks.

I am one of the feckless / stupid types who cannot keep their account in credit - usually only because of the 拢30 monthly fine they levy (to which they were only entitled because they managed to delay clearing a cheque for nine days). It would be nice to have just a little more money to enable me to escape from this permanent trap. From my point of view, it is I who subsidise the 'free banking' others enjoy.
Correspondents mention the services they receive and the costs of these to the banks. They forget that the banks have the use of their deposits to generate a huge return for themselves. What we need is the very transparency the article called for. Then we would know about the just who makes money from retail banking

What annoys me about banks is having to pay 拢25 to transfer money from one bank to another instantly, why, all it takes is a click on the key board. I deposit my money with them for safe keeping, they use my money to make more money for themself's and repay me with interest.
How about if we all took our money out of all the banks just for a day ?, imagine the chaos that would cause.
The world of banking would be totally buggered!

I find it quite astonishing the number of people who believe not only a) that everyone who goes overdrawn is "stupid" and b) that it is fair that the "clever" ones should benefit from the "stupid" ones by enjoying banking that is subsidised by these huge charges.

To those people, let me put this around another way: a) some people are poor, with less predictable lives than yours, and perhaps not the same access to education b) the charges are vastly out of proportion to the cost, and therefore illegal c) You are therefore saying that it is entirely justified that the bank should steal from the "stupid" and the poor so that you can get cheaper services, just because you are better placed to play the ridiculous and unnecessary games that the banks design for all of us.

The law is there precisely to protect the vulnerable from people like you.

Get it into your heads. People who go overdrawn don't "steal" from the bank. If anything, the bank steals from them.

All well & good Patrick (message 102) with regards banks being a business. Fine & dandy - they're entitled to make a profit. Nothings for nothing & all that.

The problem is that as well as being a business they are essentially a cartel. Which by definition makes them a business with an unfair advantage.

Oh, and to all those who say "stay in credit & you'll get free banking" - what utter rubbish. Stay in credit & don't ask the bank to ever lift a finger to carry out an automated process that costs next to nothing e.g. withdraw money abroad, pay a bill abroad, raise a banker's draft, make a telegraphic transfer etc & then maybe benking is free. But the reality of all those different charges plus the banks having next-to-free use of our money? That ain't free in my book.

It's nice to see so many people commenting that they don't care about charges because they're organised enough not to go overdrawn, and it serves people right if they do get charged.

It seems to me it's just another example of how it's poor people who lose out in a system like this. Great if you're well educated and have a good handle on your finances, I'm sure it is a good system, but for people without a steady cash flow, it actually makes their situation much worse as it's so trapping - you don't have enough in your account, so you get charged when a cheque bounces or you go overdrawn, so then you have less money, so it's harder to get things back in order.

A few people above have said that the charges should be high as a deterrent - but legally that's not allowed. The whole point of the recent wave of people claiming the charges back is that the banks are only legally allowed to recoup their costs, and as this has not been the practice they are having to refund the amount.

It makes me angry that people seem to care only about their own interests, and if others less fortunate than themselves are affected, don't really seem bothered.

Businesses has to be able to tell
us clearly what they will give us
for our money. If they can鈥檛 do that,
sack them and move on to the next.
We have to remember to constantly
train business on how to act
responsibly. History show us that,
left to it鈥檚 own devices, business
always automatically reverts to
moronic behaviour.

So don鈥檛 even think about it. Feel
free to hit business where it hurts
(in the pocket) because they鈥檇 do it
to us given half a chance.

Steve

I used to bank with the Halifax (HBOS) and on average received interest of about 拢30 per year. But I was prepared to forgo this and switched to Nat West. The reason being that every time either I or my wife went into the Halifax they tried to flog us something. Also they would not pay cash out at the counter unless it was more than 拢300; smaller amounts had to be withdrawn from their branch ATM - even when the cashiers were sitting there and not doing anything!

Two years on, the service at Nat West is still very good and I am happy to forgo interest in exchange for the standard of service I currently receive.

I think the banking system is very fair in this country. I am in full control of my finances and I was only charged twice in my banking life of 30 years. If you manage your finances and you keep your account in the right place e.g. Nationwide Flex account which does not charge any fee for withdrawals abroad and the exchange rates are excellent. It pays good interest on balances as well. With internet banking widely available it is very easy to manage your current account balance.

Instead of blaming banks, blame yourself. I do not want to see free banking disappear for some customers who has no idea of managing personal finances.

Banks are a business which must generate enough return for their share holders. This is the simple basics of capitalist economy. Profit should not be seen as a dirty word. The whole economy will collapse if there are no profits.

By the way - I do not work for a bank.

Mr Preston clearly has a Bank confused with a charity.

We all have freedom of choice and hence i have my Bank account with one provider, my savings account with another and my mortgage with a third. The reason for this being that due to the nature of the financial institutions involved (e.g. a clearing Bank, Investment Bank and Mortgage provider)and competition between these institutions i am able to obtain the best service / pricing from each.

I pay no Bank charges despite being given a cheque book and debit card and having all my Direct Debits paid, i receive a fair rate of interest for my savings (only a few 0.25% below base rate)and a fair rate on my mortgage.

I am in a lucky position that i do not need an overdraft, but have never understood why when someone feels the need to issue a cheque on their account when they dont have any money they expect the Bank to clear it and not charge a penalty. The alternative options are clear either dont issue the cheque or the Bank can bounce your cheque. Its not like Banks dont publish their tariffs.

So if we are going to start to investigate all profitable UK businesses, then by the same token we should investigate how much it costs to make a can of baked beans and how much profit the likes of Tesco make on selling it. After all if you didnt have the money to pay for it i am pretty sure that Tesco's wouldnt allow you to walk out of the shop with it without paying a penalty and also receiving a criminal record!

In reply to S Evans, post 17. Yes, the banks do indeed make large amounts of money in capital markets and investment banking.

But where do you think they get the money from to invest? From us! They receive our wages every month, year in year out to do with as they please. And we are supposed to be grateful that they don't charge us? Let alone let us have a slice of the pie.

I think its great that people have been reclaiming their charges and I strongly urge everyone to do so. The sooner banks come clear about what they are really charging us the better. Then we can shop around for the real deals. It's called competition.

I've enjoyed free-banking since I first opened my student account in 1989. Upon graduating I paid off my free-student overdraft within three months of starting a low salaried job, and have never been overdrawn since. I resent the idea that I might have to start paying when I've taken the care to maintain my accounts properly and had the self-discipline not to spend money I don't have. I wouldn't have said that charges are hidden, nor unfair, and I'd also add that nowadays a bank account is almost a necessity for the most, and ending free-banking would further penalise low-paid people from using facilities such as direct-debits for cheaper services.

Robert, you may want to ask why the Banks & the Government of the early eighties encouraged the working population to acquire bank account s that they could use direct debits & Standing Orders to avoid the weekly trip to the bank for business and armed robberies as well as reducing the cost of banking. The enticement for the public was "free banking". So wy are they now talking about charging I wander? is it greed?

Will everybody either:

a) stop whinging or
b) stop being so smug about your 'method'
It's daylight roberry, end of story!

I find it funny how much we as British people like to enjoy complaining about our banking. I've lived and banked across a variety of countries and still think we have the best (and cheapest) financial services.

People seem to forget the great advances in banking that have occured over the past few decades. From ATMs and credit cards to readily available credit and internet banking.

If you manage your money irresponsibly by going overdrawn, not paying your credit card bills on time, etc... then I believe you should be penalised for it. Why should we remove these penalty charges and instead increase the price of banking for everyone else across the board, including those who are careful? Should motorists pay more road tax but instead not have to pay speeding fines? No - the reason behind these charges isn't just profit-driven, but rather to shape behaviour.

And if you're not happy about having no interest paid on your current account, then put it into a savings a/c! It's not rocket science...

What a farce this OFT investigation is. I keep my account in credit, and so don't pay any charges. Since I am not a complete simpleton, I do understand that my "free" banking is paid for somehow. If it is paid for by feckless idiots who go overdrawn without authority, then all I have to say is hoorah! They have signed a contract with the bank, and should honour it. That's what I do with contracts that I sign.

I live in Canada after moving from the UK 6 years ago, And believe me you get a good deal with free Banking, if you don't want Overdraft charges don't go overdrawn!
Most banks here make you pay a monthly fee, about $15 for this you get the priviledge of giving them you pay cheque, and they will allow you a limited number of transactions. Write out 1 cheque to many or use the ATM once too often you will pay extra for that transaction. Oh yes you have to pay for a cheque book it's not part of your monthly fee, and it's not cheap.
Any interest you are paid on your chequing account is derisory, part of this is driven by a lack of competition (if you think the UK is a nanny state, it is not alone.
I think that any challenge to the current status quo will have a detrimental affect on how much everyone pays for banking in the UK.

Inspired by some of the comments here, I think we should all try the following:

- go to Tesco and demand to know the true cost of a pint of milk. Refuse to pay any more.

- take some furniture to a storage firm and ask them to look after it for free - it's your furniture after all so why should you have to pay?

- visit your local tool hire shop. Hire something, and on the way out pick up something else you need, but don't ask if you can take it. When they track you down and ask you to return it (which you fully intended to do) demand that all they ask from you is the cost of writing the letter.

Good luck.

We may have the most profitable banks in the world but do they make all their profit in the UK?

One of the earlier replies mentioned banking in Germany. I used to work there and still maintain an account there.

The biggest rip off by british banks is transfers to and from the Euro Zone. If we were in the Euro, they would be required to charge the same for transfers as at home (i.e. almost nothing), to send money to Germany I have to pay my UK bank 拢10 plus whatever spread they charge on the exchange rates to send money to Germany and it takes a week. Frankly it is cheaper and easier to take a bundle of notes and pay them in in Germany when I want to move any money.

Then we get customs people worrying about people with wedges of cash being involved in money laundering.... In my case I'm just saving rip-off bank charges.

There are no cheques in Germany, just transfer slips, telephone transfers and internet transfers. They all seem to be free and almost immediate. Admittedly your entire account grings to a halt if you are a cent overdrawn without an arrangement.

If more Brits travelled more and worked in the EU, they would not put up with rip-off Britain when they came home.

Once I retire, I can't see a lot to keep me here.

There re so many i'll informed comments on here that i don;t know whether to be shocked or depressed. Tocorrect sone of the missnomers

1) The big banks do not make Billions from your penalty charges - look at the accounts of all of them. There total profits from Retail banking will be around 20-40% depending on company. If you strip the profits from mortgages, loans, savings etc from that it leaves little from charges.

2) Current accounts are products same as a tin of Beans. They cost money to run e.g. cheques statements, call centres, security, processing - someone has to pay for them.

3) The average interest margins the banks make on money deposited is around 2.5 -3%. Again look in the accounts. It's because most goes in to mortgages.

4) For maintaining say 拢500 average balance over a year - the bank will earn 拢15 interest on your money. How much do you think it costs them just to produce and send out statements, books, debit cards etc.

5) Cheques are slow - but thats due to the system they have and laws which basically men that that peice of paper has to travel from where it was paid in to where the funds need to come out of and th efact that no-one really uses them anymore. If you pay in on Monday - you will usually get Interest On wednesday. There are faster systems (CHAPS) but they have lots of security and checks built in hence cost. Banks are spending Billions to develop a faster payments system that will go live in November this year that will remove the delays for standing orders and other electronic payments.

This debate is realy about how we pay for services. Personally I look forward to the day that penalty charges are reduced and fees are levied. There will then be no incentive for Banks to retain the accounts of the useless who can;'t work out that withdrawing 拢100 when you only have 拢50 is theft / fraud and they will be asked to leave. And yes .... under the banking code they are allowed to do it providing the ygive notice. You don' have to do business with them - why should they be made to do business with you.

Wasn't it Lord Reith who said that part of 主播大秀s job was to inform ... Maybe the 主播大秀 should concentrate more on bringing the facts out on this item which is of such public interest so that a rational debate could take place about this rather than pandering to the media fashion for lambasting big business. After all these big companies pay big taxes so don;t we all want them to do well??

Again lets not forget that Media companies actually make a higher % profit than the banks - Why don't media companies prmote that I wonder!!

In reply to B McCarty, post 122, sorry, the banks don't use 'your money' - unless you are Richard Branson or similar, we are talking people who can invest millions of pounds and are prepared to pay for the investment advice and opportunities that the banks can offer. Anyone who thinks that the banks use the few hundred or thousand pound deposited into their individual bank accounts each month to play the money markets is a fool

Like any other commercial organisation the banks are in business to make money. If people do not keep to their agreements (overdraft limits etc.)it is quite fair that they are charged. No body tells them that they have to have a bank account. I have banked with Barclays for over 60 years and have always had excellent service. In my opinion the present criticism of the banks is largely generated and stirred up by an irrisponsible media who are in it to make money too!

Yet again we find British companies competing successfully in the world marketplace, so what do we do ? - we tie their hands behind their backs so that everyone else can catch up !! Do I know how much my banking costs? Yes- I keep as little as possible in my current account and earn interest on the rest. When I need to top it up I transfer on the net from savings to current. When I go abroad I use a Nationwide credit or cash card. I do not go overdrawn and in any case have a facility should I need to( ie I do not use other peoples money without their permission). Everyone can do this. If they choose not to, then they should not bleat about the cost. There is nothing wrong with being penalised for using other peoples money without permission !! As to bank profits, much is made abroad, taxes are paid on their earnings and as a country we need world-beating companies. So let's stop putting obstacles in theit way and support them.

> Like any other commercial
> organisation the banks are in
> business to make money.

That's true, but like any
individual, we are each entitled to
try to squeeze more out of banks than
they can make back in profits 鈥� there鈥檚
no point paying for anything unless you
come out ahead in any deal, is there?
Otherwise, you are just throwing your
money down the drain.

A good deal is where both parties
are miserable. The market system
depends on each of us squeezing banks
'til the pips squeak. And if they burst,
who would shed a tear for a grey old bank?

To Mr S Evans, again, post 134.

Thanks very much for your pleasant reply.

Of course the banks don't use the "few hundred or thousand pounds" deposited from individual accounts - they have a giant slush fund of hundreds of millions of pounds from the sum total of everyone鈥檚 accounts that is available at any one time. Are you seriously suggesting that they do not have any need for this money????

I'd love to see a day of mass protest when everyone withdrew their money. We'd see how much the banks would miss it then.

They have our money and think that we should be grateful for the shoddy "services" they provide. Yes, I do feel a fool: a fool for letting them get away with their activities for so long.

I tell you what S, let me have your wages every month and I'll let you have it back a bit at a time, only be available to accept your cheques when it suits me, charge you 拢40 a pop should said cheques bounce and cause you to default on your account by even 1p, and offer you no interest for the wonderful privilege you will have of banking with me.

How鈥檚 that?

Why are so many making a comparison to Tesco & baked beans, along the lines of "demand to know how much it costs Tesco & how much profit they make", or "refuse to pay any more".

Firstly, poor choice of product to make your point folks. Tesco make next to nothing on beans. And as for "refuse to pay any more" - we all can. Some do. Just don't buy it. Buy something else. Perhaps Alphabetti Spaghetti, for example. In other words, there is a choice. For many there is little to choose from in banking as it's a near cartel. What's the banking equivalent of Alphabetti Spaghetti? There isn't one. In the modern cashless world you need a bank account. You need bankings version of baked beans. You don't need actual baked beans.

Oh, and post 134 - "Anyone who thinks that the banks use the few hundred or thousand pound deposited into their individual bank accounts each month to play the money markets is a fool".......

Really? Are you sure? So banks don't amalgamate all our few hundred/thousand pounds every month & make further profit on it? Say, 20 million accounts with an average 拢1000 paid in per month. Any group of banks that didn't invest 拢20 billion rolled over from month to month would surely be the fools in this scenario.

Banking remains very competitive and there are good deals around there if you shop around. That is no different to any other business. If you shop around on the internet you get a good deal. Go to the nearest chain store you don't.

If you think banks are making too much in profit from your savings, then use those savings to buy shares in the banks instead.

One question to ask is this. Would you rather your bank made a profit or would you prefer it to make a loss and go bust?

The question of charges for unauthorised overdrafts has received a lot of caustic criticism, much of it unwarranted.

Whilst there have been well publicized cases of poor supervision by the banks on excessive charging, the fact remains if one has an agreed overdraft limit, then it should be respected. In the case of unauthorized borrowings it should be pointed out that it is Not a Help Yourself Service.

Banking remains very competitive and there are good deals around there if you shop around. That is no different to any other business. If you shop around on the internet you get a good deal. Go to the nearest chain store you don't.

If you think banks are making too much in profit from your savings, then use those savings to buy shares in the banks instead.

One question to ask is this. Would you rather your bank made a profit or would you prefer it to make a loss and go bust?

I suspect from the number of "it's your fault if you get bank charges, I've managed my account properly since 1923 and never had charges" etc. that this particular thread is being heavily "astroturfed" by bank employees, or posters operating on the banks behalf.
The banks make in excess of 5bn a year from bank charges, and I can assure you their computer systems are not "old and obsolete".
Almost everyone I know has been ripped off by the banks in some way, and I cannot believe some of the postings here are genuine, otherwise how do you explain the record number of people suing their banks?

I suspect the majority of posts here come from bank employees, nearly every person I know has at some time suffered from unjust and excessive charging by banks.
The truth is free banking is not paid for by other peoples bank charges, bank charges are an illegally earned "bonus" earning the banks in excess of 5bn a year.
Many disadvantaged people are, through no fault of their own, crucified by bank charges when a wage earner becomes ill, or because of redundancy.
If you applaud the "marvellous free service" you receive because of this then you are not much of a human being.
Still with any luck this investigation will put matters to rights.

To those who say the banks are a cartel and there isn't enough competition - have you ever looked in the newspapers, the TV and even the internet??? Try somewhere like moneysupermarket.com: it lists over 300 - that's THREE HUNDRED, folks! - different current accounts.

It seems to me that those who are too lazy and incompetent about managing their finacial affairs are also too lazy and incompetent about doing basic consumer research. Talk about nannying!!

PS Bob (143): I don't work for a bank, building society, or anything like it. I'm a housewife, running a tight family budget, who believes in self-sufficiency, not spongeing and whingeing!

I am sorry..... but all the people who have stated that why should they pay for their accounts to ofset costs of people going over their overdraft limit have missed one very significant point, they are currently accepting a service from their bank and yes most are getting low interest rates and having small "stealth" charges for certain facillities, but who has been funding the banks to enable them to have what they consider as FREE banking....well I will tell you...all the people that have been going overdrawn and getting charged extortional rates.

If the banks charged each and every one of us for the service we received, ie those that kept their accounts in order an 'actual cost' charge for all the facillities they used beacause lets face it they use exactly the same facillities as the people going over their 'limits' use.

I do however feel that in addition to this people should be charged for going over their limits but at what it is costing the bank plus a pro rata proportion of over head after all... we all have the same access to cash machines, switch cards, cheque books etc... so if any of you that have been accepting the "free banking" for the last howevermany years want to drop me a cheque to pay your fair share.....

For the record i have claimed my charges back and have accepted a lesser amount than has been taken from my account (aprox 80%) as I do agree that I have used a service that the bank offers but just didn't agree with the rates that they were charging!

why does it take the OFT until now to investigate the banks 'penalty charges'?, have banks not made these charges for decades?, why now?, is it because with the advent of the Internet that large groups of people can force these so called 'watchdogs' to act?.

As for the banks themselves, people forget how much money they generate for the economy, it is not just the profits that banks make that should be reported, it is also the amount of tax they have to pay to the treasury.

The UK seems to love to knock successful companies, whilst in any other country these same companies are treated with respect.

I do agree that Banks seem to forget that they have a duty to there customers, and they forget this at their cost.

Living in the Netherlands, the bank I use to be pretty useless when it comes to anything, however, the costs of having an account with them is nominal.

They also have a branch in nearly every village with a population over 1,000, this is quite normal in Holland, Belgium, Germany etc, and it does not seem to hit the profits of the banks...funny that!.

Robert Peston is giving a superficial viewpoint.

Personal accounts used to get decent interest on current accounts but pay for transactions (cheques, credits etc.)

After Midland Bank started to provide transactions for free in the late 1980s, all banks followed - due to competition!

Interest on credit balances started to disappear but this is taxed anyway. In theory notional interest on the credit balances is used to offset transaction costs but this can not be made explicit otherwise the Inland Revenue will want to tax the benefit of having free transactions.

So we have a situation where people who keep their account in credit get free branch service, free cheque books, free debit cards, free cashpoints, free statements and free debit and credit transactions.

However, people who are charged for going overdrawn, especially for going beyond their credit limit, subsidise those who manage their accounts carefully (often the poorest).

If we return to charges for transactions and other bank services and receive higher interest rates on credit balances the result will be:
- we will no longer get transaction costs effectively offset against interest for tax purposes and end up paying more tax
- there will be less cross subsidy by one group of customers (those who go overdrawn) to another group of customers (those who currently manage their accounts carefully).

What you can not expect is for banks to provide branches, cashpoints, cheque books, statements etc. for nothing. You get owt for nowt.

So the question for Robert Peston is "how do you want the banks' costs to be paid for and by which customers?"

Lets all slag off the banks, its so easy!

Now remember this:

It is NOT the bank's fault that the customer goes overdrawn.

When opening up an account, the customer is provided with TERMS & CONDITIONS of which most is in small print but the penalty charges are clearly identified. By opening the account, the customer is entering into a contract and so if the customer does go overdrawn, and the agreement states a 拢35 charge for each item, then the customer should pay it.

Free banking for those in credit? Yes, that is fair as it is part of the same contract.

Low interest rates? With all the FREE transactions on the account, what do we want, blood?

If you want higher interest, move your money to an ISA and just keep bills money in your current account. If you run short just before pay day, use your credit card to buy things and pay it off immediately after pay day.

Our banking system is fair to those who use it properly. I do agree that penalty charges are too high but if people contract (ie open an account) and these charges are identified then people shouldnt expect the banks not to stick to the contract.
拢12 per indiscretion is probably reasonable and this has been brought into play.

Robert,

You ask the question "what do you pay your bank for your current account in a typical year?"

My current account is with Nationwide. I have not paid them anything for my account - ever. Last year I received about 拢100 in interest on my current account.

I also don't pay any charges for using my plastic abroad - on my recent holiday in the USA, no charges plus an exchange rate very close to the interbank market rate. As for buying currency in the UK, why do that at all - using machines to get local currency abroad is free, easy and also a great exchange rate!! (PS - the Post Office don't charge commission on their foreign currency)

OK, I avoid overdrafts and penalty charges - but that isn't so hard, with a little discipline and planning.

But I say to anyone who thinks they are paying too much for their banking - there are certainly places you can go where you can really get banking for free - switch now and save.

Last year I had to send a substantial amount of money overseas. When I went into my bank before 12 noon I was told that the money would go that day. I was charged about 拢20 for the transaction and I received an email the following day from the recipient in an other country in Europe to confirm that he had received the money - to me that is quicker than some transfers between banks in the UK.

As I spend a substantial part of the year overseas I have opened a Euro account in the country I am in most - I am charged 鈧�10 when I pay a sterling cheque in (irrespective of the amount) and the funds are cleared and available for use by me within 5 working days. I understand that is not the norm and most banks overseas take 20+ days to clear UK cheques. It is certainly cheaper to write a UK cheque & pay it in overseas than it is to transfer money from here.

As a consequence of this I do not pay any fees on my spending when travelling around Euroland as I have both a Euro debit & credit card

Penny (message 146)

So, the banks aren't operating in a near cartel then? Let's examine the evidence.......

1. The vast majority of people bank with the big 5 banks. So, the best buy tables list 300 accounts. Great, except 297 of them are near indentical

2. Okay, you & I are bright enough or tenacious enough to work through the myriad obstructions banks place in our way when trying to switch to the rarely spotted more competitive account. Many aren't & the banks play on this

3. Banks make money from so many other sources than the current accounts which appear in the best buy tables

4. If banking is such an open & fair market can you explain to me how, almost without exception, each of the banks (supposedly) independently arrived at a penalty fee of around 拢30 despite the true cost to them being around 拢2 to 拢4? Chance? I think not. Off-the-record conversations to fix the price at an artificially high level? Sounds more likely.

5. If banks are such paragons of virtue how come they are all currently soiling themselves at the thought of class action being taken? What? Banks, settling out of goodwill? Surely not.

It's a cartel in all but name. If it walks like a duck, quacks like a duck then it probab......you how it ends, I'm sure.

No Mr Foster, you are wrong.

I AM and ex-bank employee and i left on acrimonius terms. Its just that i have an understanding of how the banking system work. i suspect a lot of of othe posters are either the same or simply applying common sense.
people need to get it through their heads that it is their responsibility to run their account, not the banks.
It is their own responsibility not to 'seek to obtain pecuniary advantage by deception' (look it up try the Theft Act).

Banks issue leaflets about how to operate your account...like not write out cheques if you dont have the money in your account at the time, so there really is no excuse.

Any one who really thinks the banks are going to suffer a reduction in profits because of a the OFT review is living a dream. they will simply start charging for more services

And as for the Post by Rob Anybody....either make a sensible comment or dont bother at all...i cant believe the moderators put that one up.

Mr Preston....look at the balance of the posts and perhaps you should write an article which offers a fair and balanced view, and points out the damage that the OFT review will do.

Its not just been charged for unauthorised overdrafts but I get charged for blocked payments, so even if the payment doesnt go through and remain within authorised overdraft or even credit I get the charge.

When I transferred money to my sisters bank account it took 4 days we both in the same bank lloyds tsb.

When my bank wrongly took payments for my loan twice in one month I had to wait 5 days for the pamyent to clear from THEMSELVES why? yet on another occasion it as instant.

Paying for my credit card from my account again in the same bank takes days to process why?

Abroad in europe these delays are shorter and in some countries dont even exist, I wonder how many people would not be overdrawn if they werent sitting around waiting for deposits to clear.

Anyone who argues that the "I don't see why I should subsidise people who can't manage their money" if free banking ends needs to face the fact that at present those people subisidise your banking activities.

Some of them may get in to difficulties due to a lack of effort on their part, but for many more people on low wages or in start-up businesses unforseen problems can and do happen.

Expecting others to be excessively penalised so that you pay less for the services you use yourself is nothing short of selfish.

Ah yes, the 'people should just keep their accounts in order & I don't see why I should subsidise them' brigade. What you are failing to recognise is that what these vultures are doing is unlawful & that's the stark truth here. The charges that they levy should only be to cover any loss or damages that they have suffered as a result of an exceeded overdraft or bounced cheque or DD, the fact that they threaten us with the 'end of free-banking' if these charges are scrapped, proves that they are actually charging more than their costs, it's not rocket science. They prey on the most weak and vulnerable members of society for their own gain and I hope that they are cut down to size by these investigations, unfortunately I doubt that they will.

To Nick, message 151.

Ah, yes - the old T's & C's argument. Just one flaw in that line of attack. And it's a mammoth sized flaw.....the Terms & Conditions are ILLEGAL. (Yep, I can type in capitals as well). You see, we have laws in this country. Unfortunately for banks, those laws apply to them as well.

Oh, and the 拢12 "cap" (despite the cost to the banks being only 拢2-拢4) is currently only applied to credit card misdemeanours. Most banks still charge 拢30+ penalties for current account transgressions. Despite it being ILLEGAL (oops, there's those capital letters again!)

If you go overdrawn or fail to make a payment - you're breaching an agreement with the bank. Rather than call the penalties "charges", why not just call them "fines".

I have no problem being charged for going overdrawn - it is entirely my fault - and it is a breach of my agreement with the bank, so I view their charge as a fine, the same as if I was fined for speeding.

Perhaps if other people took more responsibility for their own financial failings, the banks would be nicer.

Interesting thought: Banking charges in Holland are the lowest in Europe. Dutch banks are reasonably profitable, but not excessively so. So now the leading Dutch bank will be taken over by a (a more profitable) British bank. Would this have been possible if there'd been fair competition in British banking? Will Dutch account holders be similarly ripped of by Barclays? Is this a level playing field? Will we allow that to happen? (and I do know that ABN isn't the best-run bank around)

Opening the banking system to monthly charges would be a massive mistake. Anyone that believes that everyday banking is truly and absolutely free is an imbecile. What it is really is relatively free. I understand and always have that my banking costs are free provided I use my card within the UK and sacrifice any interest I may receive on cash on deposit. This offsets my transaction costs to the bank. As I have no minimum balance I can then move excess cash into an interest bearing account to minimise this offset.

Compare this situation to that in Australia where monthly charges are the norm. You also don't receive any interest either, so you pay two fees. Give me the UK system any day of the week. I've been here 6 months and trust me, the system sucks and always will. It's rip-off Britain x2, and don't even think about trying to access your money overseas with these boys - you have seen bank charges until you try that.

The problem with the UK, and it's one of the reasons I left, is that the majority get punished for the sins of the financially illiterate minority. This is just another nannying example whereby these fools will know their annual charges (what's wrong with mandating an annual summary and breakdown sheet?) and everyone else will now be getting them for no reason.

Only the sun goes up for nothing. Of course we pay for banking for the branch staff need a salary. The branches themselves need heating, lighting, cleaning as well as renovation from time to time. Question, How much does it cost a bank to send monthly statements? That's just one expensse.
David Harris.

If banks all threaten to withhold free banking facilities simply to ensure increased year on year profits, surely this is merely the most basic definition of a cartel? Is this not illegal under European legislation? The car industry pricing cartels were broken up so why not the banking cartel?

All this piffle about keeping your account in balance is completely irrelevent to the central question of how banks manipulate their charges to ensure that they make enough profits to match increasingly unrealistic year on year shareholder expectations.

@130 or alternatively

- go to Tesco and get a pint of milk. --- Then find the cost is under 拢2 but you have just been charged 拢36 and yes you would want your money back as well.

- take some furniture to a storage firm and ask them to look after it for free --- False analogy the storage firm doesnt get to use your belongings any way they wish until you collect them the bank does.

- visit your local tool hire shop. Hire something, and on the way out pick up something else you need, but don't ask if you can take it. --- Again totally irrelevent and false analogy.

May as well say no law matters as long as somoene was once sent a bit of paper with charges and smallprint in 1pt font

So if I send you a letter with small print sayign the things you agreed to have changed then its ok for me to do anything I want?

The penalty charges are illegal and unenforcable under UK law regardless of what fake analogies you may try and dream up to justify your superior and holier than thou attitude.

@134

Any body who gives an analogy of the banks using the Billions Richard Branson leaves in his current account is the fool

Why does everyone talk about overdrafts as if it somehow stealing the banks money? As long as it is paid back, it is an unauthorised loan, facilitated and agreed by the banks own systems, paid for through interest, and it costs the bank virtually nothing.

If you want to use a supermarket analogy for overdrafts, it is over-shopping, not stealing, something like this:

You would be required to pay the supermarket a weekly subscription fee, which would entitle you to enter their premises and buy goods up to an agreed limit every week, whether you need to or not.

Each time you go shopping, you pick your goods (which may or may not have price stickers on them), take them through the till, and PAY FOR THEM. Once added up, if the total is less than your agreed limit, great.

If the total is more than the limit, you have OVER-SHOPPED, and have to pay a surcharge on top of the cost of the goods. This is to cover the cost of the teller informing you about the surcharge.

The teller will not tell you BEFORE the limit is reached, and stop processing your order (it's not their business to manage your shopping for you, and you know the rules).

Once breached, you cannot change your limit, this must be done IN ADVANCE.

Nor will the shop accept that you immediately take the goods back to the shelf, to reduce your bill down to the agreed amount. Once you have passed the till it takes 3-4 working days before you can re-enter the shop and return the goods, and this is too late for returning the surcharge.

On the upside, the shop won't charge you extra for entering, for plastic bags, for using their trolleys, or for printing out your receipt.

PS. why don't supermarkets design these kinds of games, I wonder?

Chris S - an interesting but totally specious argument. Writing out a cheque for something, say a TV when money is not available in the account ) means that you are getting goods/services from someone (quite probably not the bank) without actually having the means to pay. If the bank bounces your cheque (for which they might charge you)you still have the TV but the person selling it to you doesn't have the payment. That is easily interpreted as theft or fraud.

Quite often banks pay those cheques and then charge a fee or high interest reflecting the risk that they have paid out money you didnt have, without knowing when/whether they would be repaid.

The alternative of course is to return all cheques which create an unauthorised overdraft which leave the person who sold the goods (TV in this example) to try and get the money themselves, recover the goods, go to court etc.

Some people on this forum have suggested that poorly paid or less well educated people cant be expected to manage their finances properly????
whats so complicated about not spending money you havent got? OK it means putting a bit of time aside to work it out but it is actually very simple to do. th eproblem is people cant be bothered.

The answer to all this is really very simple and is doesnt matter whether you are disgustingly wealthy asnd degree educated or unfortunately poor and maybe not as well educted - just dont try and spend money you havent got - end of story.

Patrick,

What you are saying is not correct. A cheque is an IOU. If it bounces, it is still signed proof that you acknowledge your obligation to pay the money, and quite probably that you intended to. Otherwise a bounced cheque would be a criminal offence, and despite what some people here try to make out, it is still not. Whoever accepted the cheque sold the goods on credit, and they take the associated risk.

The only difference between an overdraft and a bounced cheque is that the unwanted credit falls on the bank instead of the seller. Banks, by the nature of their own service, accept the risk that you can withdraw more money than you have (or have agreed to withdraw). By doing this you create an automatic IOU to the bank. Again, this is not theft, no one is disputing that you owe the bank the money.

So the bank has an "unwanted" IOU from you. IOUs are what banks buy and sell, it is their main business, hence the analogy with "overshopping" in the supermarket. They charge you interest for this IOU like any other. However, their claim is that, because you didn't make a prior arrangement for it (and pay for the priviledge), it costs them a lot more money. And mysteriously, so does making the arrangment once you're actually overdrawn.

The risk argument is only valid in very specific circumstances. If the bank tried to make you pay for a 拢300 overdraft limit, you didn't take it up, and then go 拢200 overdrawn, they cannot then claim that you suddenly have become hugely more risky than you were, because they were fully prepared to accept this risk maybe even the day before, for a few pounds per month. What's more, they are quite likely to accept the risk again the next day, as soon as you paid off your overdraft.

Furthermore, the longer you stay "illegally" overdrawn, the riskier it is for the bank. For any risky credit elsewhere in the world, the lender would therefore get compensation through a risk premium on the interest rate. Even if this risk premium was 100% p.a. (an outrageous interest rate), after being overdrawn 拢100 for a week, the premium (or "fine") would only amount to about 拢2. The implicit interest rate if they charge 拢30 is around 1500% p.a., valuing your IOU a little bit higher than a national lottery ticket.

That is why the banks don't use the risk argument, it's easily proved wrong. Instead they claim that the adminstrative costs are very high. But if any court ever asks them to explain why it costs them so much, they always back down. This is because it is very difficult explain why it costs 拢30 to produce a computer generated letter.

im quite bewildered by all the argument going on as regards overdraft charges and the only thing the Banks must come to realise is that the can be sincere to the society

Chris,

I am not sure you are correct about a cheque being simply an IOU. I think it is now commonly accpted as being payment, not credit, albeit deferred while it goes through the clearing cycle.

I would still contend that writing out a cheque for goods/services without the funds available to meet the cheque is 'obtaining pecuniary advantage by deception' and as such is fraud, still a criminal offence. i might be persuaded it is not strictly theft, but still illegal. Any one legally qualified going to comment?

I think the risk argument is valid in all circumstances of unauathorised withdrawal, although the level of risk may vary.

I cant argue with the percentages you quote but still maintain there is an easy way to avoid these - manage your (not you personally) money properly and avoid going overdrawn.

Mr babah - i didnt really understand your rant, except for the bit about standing up and rejecting charges. Thats perfectly reasonable - find another bank (or as i might possibly have mentioned before reject the charges by making sure that if you beleive you have money in your account that you actually have. it really isnt that difficult to check - online, phone, cash machine...even nip into the branch during opening hours.

The level of financial ignorance from some of these posts is frightening. Do we ask M&S to cost justify what they sell or threaten to sue our Doctor because he charges 拢25 to sign a passport application (taking all of 3 seconds)?
Banking for the prudent and responsible is free in this country. I've never paid charges in 30 years. If you want to earn better rates on your money switch it out of your current account into a savings. The silent majority are pleased enough with their bank but the feckless, spendthrift minority are about to ruin it for the rest of us!

Hammersmith

You must be very proud of yourself. Well done.

Now, onto matters in hand. The comparison with your GP is invalid. Firstly, you don't have to use your GP - there are numerous other professionals who are authorised to countersign a passport application & will do so for free.

Secondly, it is not illegal for your GP to charge you an amount disproportinate to the cost. It is, however, entirely illegal for a bank to make a charge that is effectively a punishment rather than reflecting the true cost incurred by said bank.

You see you may well feel that those who incur charges are feckless but, unfortunately for you & everyone else who advises those people to run their financial affairs in a more responsible manner, the law doesn't take into account the fact that they may or may not be feckless. The law merely states that the bank is entitles to recover the costs it has incurred & no more.

So, in summary, you are right with your first comment - the level of financial ignorance is frightening. You would have thought given the publicity these cases have had that anyone would have known the charges are illegal. Ho hum.

Rich,

Presumably you wrote that before the LLoyds case. as i understand it, although 'penalties' may be illegal when charged by Banks it is only the media and pressure groups who have so far said these are penalties.

The LLoyds case, which i accept is from a court which can't set a precedent, says they are reasonable.

you do make a good point that the obvious issue here is the legality or otherwise of the charges. Having said that there appear to be deeper (and wider) social issues of people (not neccessarily posters on her)who simply dont seem able to take responsibility for their own actions and bleat when they are faced the consequences.

And lets face it, the media and pressure groups are just up for a good
'poor litle david v Big bad goliath' story and in a lot of cases aren't too worried about the facts.

There...that should prompt some comments

Patrick

No, I didn't write it before the Lloyds case. Okay, so Lloyds have won a solitary case in the face of hundreds that have gone against banks. I guess that comes down to one judge's interpretation of what is a penalty & what is a charge. The claimant also has leave to appeal & I wouldn't be at all surprised to see the decision overturned, particularly if at appeal he is represented by legal professionals.

My earlier comments regarding legality were based on the vast majority of cases either won in court or settled out of court - clearly the banks en masse are extremelt concerned about the validity of these claims or they wouldn't be paying out. It is for this reason that I get annoyed by the legions of people on here who simply say "well, they should manage their accounts properly". It entirely misses the point. In the eyes of most judges & apparently most banks, when challenged the fees/penalties are indefensible. If this wasn't the case more banks would defend them.

Oh, and in case anyone was wondering I do manage my account properly.

I am with the Nationwide and I do NOT pay ANY fees at all when I draw out cash any were in the world with my Nationwide Cash Card, that is also free.

Hello Robert,
For anyone who keeps the a/c in credit or holidays abroad a few times per year I'll say only one thing, 'switch to Nationwide'.
Bye.

Rich,

Hundreds of cases that have gone against the banks? I stand to be corrected here (like feel free to quote the a case name or two) but my undersanding is that the the LLyds case is the first one that has gone to a court decision - hence the potential importance of it.

I agree that the decision is subject to appeal and it will be interesting to see what happens there.

It will also be interesting to see the long term impact on the banking sector. Perhaps the banks will use the breach of contract argument and ask more frequent offenders to make alternaive banking arrangments, which they are perfectly entitled to do.

Hang on! I thought European banks were no longer allowed to charge extra for international withdrawals? Or this is only for those of us in the Euro area? In any case IBAN transactions denominated in Euros may not cost more than national transfers using BACS so a payment in Euros at market rates is bound to be the cheapest option.

Patrick

When I referred to "hundreds (of cases) that have gone against banks" I didn't mean as a result of judgement. I was referring to cases that were scheduled for hearing only for banks to settle at the last minute e.g. 77 cases in one day at a Leeds court. With regard to my comments re: judges, there are those who have threatened to strike out bank's proposed defences as being clearly delaying tactics. My fault for not making myself clearer.

Why would so many banks pay up when it comes to the crunch if they were confident in the legality of their fees? No, it doesn't add up to me either!

With regards to the Lloyds case my guess is that they reviewed the claimant's evidence before the court date & decided that there was a water-tight case to defend - it all comes down to how proficient the claimant was at setting out his case i.e. he probably messed up. Whether that extends to the multitude of other claims in process remains to be seen. My guess is it won't. Time will tell.

I agree with your final paragraph in that this is the probable likely future for banking.

When discussing taking money out abroad, I'm stumped as to why the American Express Travellers Cheque Card isn't mentioned. It is a pre-paid card that, in my experience, has worked flawlessly. It can be obtained in Pounds, Euros, and US Dollars, locking in the rate at the time of purchase. It works in ATMs and anyplace that accepts AMEX. The funds never expire and there are no stealth fees like those often associated with pre-paid cards. BEST OF ALL, unlike banks, AMEX managed to get a card in my hand 72 hours after application. Let's see any bank match that level of service. Travel was AMEX's forte. Apparently, it still is.

Further to your article on cash dispensers, the use of DCC is also becoming common in hotels. The credit card terminal is often programmed to allow this option without asking the customer, adding a hidden cost. I recently experienced this in Ireland even though the receipt clearly showed that I should have been given the right to choose.

I would like to add my experiences of using an ATM while on holiday in Puerto de la Cruz (Tenerife) recently. Whichever ATM my wife or I accessed using our Nationwide Flex Account Debit Cards we were given a language option which is something British banks could learn from. We were also told the current rate of exchange for that transaction, amount in sterling to be withdrawn from our account and the current cost of a Euro. All this free of charge - day or night - from Nationwide - a Building Society NOT a bank!!!

i can understand a charge for a dd not being paid due to insuficient funds if they paid it for you , but charging a seventeen year old 39 pounds for his 120 POUNDS wages being one day late and therefore unable to honour his dd of 15 pounds is bordering on the morals of a thief .welcome to the world of banking young man which we all know is full of BANKERS please excuse my spelling

I find Joe's comment and implied insult (post188)somewhat disrespectful.

Banking, like most industres has it share of...shall miss-spellings but probably less than a number of other industries (whcih unlike Joe i wont name)

However, the majority of bankers are genuine hard working people who have to put up with the increasing number of customers who are totally incapable of planning their finances and running their account in accordance with the guidelines the banks hand out when an account is opened.

These people feel it entirely appropriate to try and take money which is not theirs and then moan when they are faced with the charge which is published freely available in branches and handed out to customers when they open their accounts.

I have some sympathy for the 17 yr old. Did he aproach his bank and explain the situation? They might be sympathetic (if it was the first time) and refund -they do you know...they are human) - did he point out to his employer the costs he had incurred throught their error - this assumes he didnt get warned he would be paid late and just ignore it.

Too many people stick their heads in the sand and hope problems will go away - they wont - talk to yuor bank before the problem and make arrangements.

Personally i hope the forthcoming court case finds in favour of the banks, perhaps noting that the complaining customers are in breach of contract.

Finding against the banks will simply mean that the majority of their customer who manage accounts properly will pay more. unfortunately, and as usual, the press concentrate on the good story of the 'rights' of the noise minority agains those nasty evil banks rather than taking a serious look at whats actually happening...that wouldnt be a good story would it!

In response to (189) most of us believe we should be charged something for going overdrawn/returned DD etc, but to be charged 拢30 for say going overdrawn by a few pence!!! Banks charges should only be applied to cover the actual loss to the bank and not be a way of boosting their profits. This is what the law says. I'm guessing banks knows this, thats why half a billion has been refunded to customers

I can speak to, and see, my cousin in Australia with less thnan a second's delay. The finacial services sector was the first major industry to use computers on a large scale, so why does it take a bank four working days to transfer my money between accounts.....?

I'm a masters student, meaning i don't get a student loan and i am currently self funded. I've been struggling on the verge of my agreed overdraft limit for some time now, and recently I had an unexpected bill come out of my account, leaving my 17p over my agreed limit. For this my back charged me 拢28, even though as soon as i realised what had happened (only a day or so afterwards) I transferred some money into that account to rectify the problem. Now i understand and agree that there should be charges for going over your agreed limit, but 拢28 for 17p is a bit excessive do you not think?! Being a student, 拢28 is a lot of money! That's a weeks food shop for me! Perhaps something a bit more sensible, like double of even triple the amount you go over by would be more reasonable?

Also, what about those card machines that charge you to get your own money out?! Not so long ago i went to a local shop just to buy some bread and milk, but because the man behind the till said they'd only take cards if it was over 拢5, i had to use the card machine, which charged me 拢1.50 just to get 拢10 out! I could of bought another carton of milk and bread with that charge!

Personally i think someone should set up a purely online bank, and just use post offices if you want to cash in money (though most people I know use transfers these days anyway) - it would help the post offices out, plus no paper or building expenses - it would at the very least be better on the environment! Though i guess you'd still have to have those irritating phone centres....