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Personal Banking Investigated

A further study of charges for UK bank services has been announced by the Office of Fair Trading (OFT). The OFT has already looked at bank charges on unauthorised overdrafts and bounced cheques, but has now decided to carry out a more wide ranging investigation into personal banking.

Most people would say that consumers in the UK receive current account services for free. This is because in general there is no monthly or annual fee charged. However, according to the OFT, at present customers do not really know how much they are paying due to hidden charges and subsidies. For example imposing high fees for unauthorised overdrafts helps fund the free current account service. Customers who stay in credit are not affected but this system can be unfair to those who go overdrawn. Another issue is the poor interest rates given on current accounts.

The OFT would like to see much greater transparency in the system so that customers can see exactly how much they are paying and why. However, they intend to carry out this much wider look at the structure of personal banking before making any recommendations. They hope to avoid a situation where banks are forced to reduce charges in one area but then increase other fees.