|
News Index
Next
Previous
Banks and building societies have increased charges by up to 20% on average in
the past three years according to research carried out by financial research
company Defaqto.
The research reveals that average penalties for bounced cheques, unpaid standing
orders or direct debits are now more than £30, compared to around £27 in three
years ago.
The OFT has already forced credit card providers to cut default charges to £12
and is considering similar action in the current account market.
Earlier this
month it announced it was undertaking further work on current account fees and
will decide whether to launch an investigation by early 2007.
Defaqto argues that consumers who pay fees for unauthorised overdrafts at an
estimated annual cost of £3 billion are effectively subsidising those who do not
incur charges and any OFT action to cut the penalties could mean all customers
suffering.
It believes providers will move to charging account fees for all customers and
could also introduce fees for customers who use their accounts heavily.
David Black, Defaqto’s Head of Banking and author of the report, commented:
“There are significant administration costs involved in providing a current
account service and the providers must not only cover these costs but also
provide a margin for profit.
“Someone has to pay for the service, and in the case of accounts where banks do
not charge a fee, it is those customers who go overdrawn and/or incur default
charges.
"As a generalisation the poor are subsidising the better off.
“Regulatory changes on fees may well result in cross-subsidisation no longer
being available.
"This may be fairer but is unlikely to be welcomed by those customers who
currently pay little for the benefits they receive.
“Future development will see many providers move to a charging structure that
involves a compulsory account maintenance fee and which also penalises heavy
usage.”
Source:
Getting Paid
|
