Expect big changes in bank charges (Sharon Bowles MEP)

Sharon Bowles MEP <info@sharonbowles.org.uk>

Expect big changes in bank charges

January 14, 2008 12:00 AM

ATM As the High Court test case gets underway between the Office of Fair Trading and a number of High Street banks over the imposition of high and "unfair" overdraft charges, Sharon Bowles, Liberal Democrat South East MEP, said, "Excessive bank charges have meant that once you fall into the red it is nigh on impossible to climb out. Very few people would choose to go overdrawn and those that do tend to be the most in need. It is irresponsible to make huge sums from the most vulnerable, pushing them further and further into debt.

"I certainly do believe that banks have a right to charge for unarranged lending but it must be reasonable and responsible, reflecting the actual cost incurred to return an unpaid debt or secure the borrowing which, like sub-prime, may be risky."

If the judge rules in favour of the OFT, banks are likely to face a refund bill running into billions. Sharon went on to say, "If this happens we could see the end of free banking in the UK or more accounts tailored to those who may need occasional unauthorised overdrafts."

It is already the standard practice on the Continent to be charged for operating a bank account, but charges for overdrafts are tiny. There are signs that banks in the UK are moving in this direction. A number of High Street banks have recently introduced monthly charges for customers who are regularly overdrawn, in return for a lower unarranged borrowing fee.

"As an option this should have been available long ago, it would have helped so many households from spiralling into debt," said Sharon.

Ends