'Unfair' bank charges ruling could disadvantage the 'silent majority'

12 May 2008 / by Rachel Mason
If banks are no longer allowed to charge customers for going in the red, it could be those who stay in the black that suffer.

A victory for the consumer in the unfair bank charges case could mean the end of free banking as banks try and recoup the estimated £35billion they rake in from fees by charging for day to day banking, and this, says MoneyExpert.com, will not be popular with the 'silent majority'.

A recent High Court case between the Office of Fair Trading (OFT) and eight major lenders ruled consumer contract regulations can be applied to determine whether or not the bank charges are fair; this paves the way for action to be taken to see them reduced to better reflect the cost to the banks.

The decision was reported as a triumph, but in order to recover the money they would have raised through bank charges, banks are expected to look for alternative revenue streams. This is likely to include fee based banking, but this will not be popular with the vast majority of people according to MoneyExpert.com's research.

The website estimates that more than 80 per cent of people currently do not pay overdraft charges, that 66 per cent of people say they would not be prepared to pay for a current account and that "attitudes towards paying a monthly account fee have hardened over the past 12 months."

According to the site's data, of those who would be willing to pay a monthly fee for their bank account, just under a quarter are only prepared to pay between £1 and £5 while just 9 per cent are willing to pay between £6 and £10. Last year, the average ‘acceptable' monthly fee was £7.29.

Sean Gardner, founder of MoneyExpert.com explains: "Given that most people would prefer not to see the end of free banking and would only be prepared to pay a modest monthly fee the majority of bank customers stand to lose if the banks eventually lose this case."

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