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Banks Raise Current Account Costs ‘Covertly’
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(21-01-08) - Britain’s high street banks have been accused of sneakily fleecing their customers in a Times report published yesterday. writes Dan Drage dan.drage@consumerchoices.co.uk |
Finance expert Clare Francis has lifted the lid on such practices as raised costs of authorised overdrafts, reduced interest rates on accounts in credit, ‘useless’ loan insurance and confusing savings accounts, all of which have been introduced in the last 12 months.
These moves are seen as a strategy for banks to recoup lost revenue should they be defeated by the recent OFT action. The OFT are currently contesting the legality of bank overdraft charges in the High Court. If the banks lose, then they stand to lose billions of pounds.
Francis outlined the following tricks as major sources of new income for banks:
- Raised authorised overdraft rates
- Reduced ‘in credit’ current account rates
- Mis-selling loan insurance to customers who don’t need it
- Savings accounts with hidden agendas
- Penalty charges for not using a credit card often enough
- Penalty charges for failing to inform the bank of an address change
The big five banks, Barclays, Halifax, Bank of Scotland, HSBC and Lloyds TSB are expected to announce record profits of over £39 billion this week according to Brewin Dolphin, a leading stockbroker.
Chris Eagle, Commercial Manager at CreditChoices, views these changes as somewhat inevitable, and urges consumers to monitor their current accounts carefully:
‘In the same way that you would check your bank statements for fraud, you now have to check them to make sure that your bank is delivering their promises. Savings accounts need to be scrutinised especially closely, with some accounts penalising you for making too many withdrawals. Think twice before taking out loan insurance, only those in full-time employment are usually permitted to claim on these.'
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