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Which? calls on FCA to clamp down on bank charges

Peter Vicary Smith 480

Which? is calling on the Financial Conduct Authority to clamp down on “high or complex” bank overdraft charges after research revealed customers with ‘free’ current accounts face fees of up to £900 a year.

Which? has today published new research on bank charges which it claims “shatters the myth” of free banking.

The consumer body says customers with ‘free’ current accounts who are overdrawn for two days a month without permission face charges of between £120 and £900 a year.

Furthermore, Which? says HSBC and RBS/Natwest customers with authorised overdrafts are still charged an annual percentage rate of 19.9 per cent.

Which? chief executive Peter Vicary-Smith (pictured) says: “When some people are paying up to £900 a year in bank charges it completely shatters the myth that banking is free.

“The suggestion that banks should increase charges to avoid more scandals defies logic and is a slap in the face for consumers who are being hit hard by one of the worst financial crises in recent times.

“Banks must be far more transparent about their fees and charges so that people can clearly see what they already pay.”

Which? wants the FCA to investigate overdraft charges when it comes into being next year.

It is also calling for increased competition among high street banks, the introduction of portable accounts to make switching banks easier and for all banks to provide electronic information so people can compare charges between banks.


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. These stories make my blood boil. Surely the key phrase in the whole story is “OVERDRAWN WITHOUT PERMISSION”

    If someone took my money without permission, I would bring charges against them as well.

    Its the general public that need educating, Banks are not charities giving free handouts, they are a business with overheads and shareholders.

  2. Aw Come ON!

    If you are overdrawn – that’s a facility that you pay for. If it was unintentional then you ought to pay closer attention to your finances.

    For those of us in credit banking isn’t free either. We subsidise the feckless with the low or no interest we receive on our money – which is utilised to lend out to those who wish to spend now.

  3. In their transparently desperate attempts to get headlines to sell their crappy, poorly written magazine I fear that Which? has just fallen straight into Martin Wheatley’s ‘Free Banking Must Be Banned’ trap.

    Fools…all of them

  4. Is there anything Which will not stick its nose into?
    No mention of the £1.2 Million Which is reported to have made whilst procuring a “better” deal for electricity consumers.

  5. If a certain mortgage lenders has to represent a direct debit you will have to pay £50! Justify that!

  6. O/D charges are a underhand way for a bank to make profit. Cant believe the comments here. The admin costs to deal with unauthorised charges are negligible and only exist because the bank doesnt want to put in a restriction to stop you spending more than your limit even though they can easily do this.

    Wake up, you jokers. Please dont get me started all the other money making schemes the bank have in place which make no sense in a conventional real human relationship.

  7. Remember the first line in strategy – if you are under pressure attack. The second line in strategy – if you want cheap publicity, jump on a band wagon.
    The banks have left themselves open to attack by very poor stewardship. Banks are there to optimise (which is not always the same as maximising) returns for investors and staff by providing a practical and competitive range of services. By maximising returns for senior staff they took their eye off the ball and left themselves vulnerable to attack. By maximising returns, they engendered large losses. Optimising returns may not have had the same catastrophic impact – but that’s conjecture.
    So a lot of petty institutions, like the FSA, who were totally out of their depth with bank operations, and have left themselves vulnerable to adverse perception, now want to extract blood. Someone else’s blood of course, because looking the other way when one is hit by a bus must be someone else’s fault. So let’s attack the banks, at any level, in order to distract attention.
    The vast majority of banking products are beyond the comprehension of these institutions, especially Which?, so they have to attack something that falls within their intelligence level. Bank accounts. Oh dear, the costs are not transparent, and transparency is the current “in-phrase”. Of course these charges are not transparent because they do not exist, unless one elects to step outside the stated parameters. And if people say that these parameters have not been made clear I believe they are telling porkies because with virtually every missive one gets from a bank there is a list of conditions attached. The only real lack of transparency is just how much of the Brazilian Rain Forest this explanatory literature is costing.
    But let’s return to one of the comments made above – banks are there to optimise returns. So it can be assumed that the banking arm of any bank is a commercially profitable enterprise without needing to charge for bank accounts. So they must be absolutely delighted by this regulatory insistence that they charge customers for this facility. I do not for one second assume that it will have any impact on the costing of other aspects of banking operations. There will still be targets set, because that is how large organisations operate. There will merely be more money to distribute between staff (mainly senior) and shareholders (mainly allegedly).
    If banks are able to charge very high annual rates on authorised overdrafts then this is less to do with regulation than competition. If this is true then it should be a matter for the Office of Fair trading to declare that Banking is now in a Monopolistic position and impose a limit on overdraft charges. Banks are then free to implement that limitation as they wish within their own business plan – there is a rumour that that is an benefit of free enterprise.
    I cannot see that such a control should ever fall under the auspices of the FSA/FCA. They are about “conduct”. Charges are about operational costs. If we want to go down the latter route then let’s be honest about it and nationalise the banking operation of banks.
    I am fortunate enough to be able to run my accounts in the black. I do not complain about lack of interest because at the levels that are likely to be involved it would be monumentally irrelevant to my living standard, and would increase my work load in having to account for that interest to HMRC annually. I am happy with the compromise of not paying anything. I resent others trying to change the current status quo.
    If I do have to borrow I understand that I will have to pay for the privilege. I am also aware that there are many different ways to mitigate borrowing costs. If I elect not to use those ways then again I have exercised (possibly by laziness) a choice. I may believe that the charges levied by banks are high – but there is no way I could deny they are not transparent.
    The current debate, mainly by peripheral organisations, is, I believe, a total nonsense and a smoke screen to hide the fact that they are totally incapable of making an impact in areas that would have a real impact on the lives of people in the UK.
    “Work expands so as to fill the time available for its completion.” C N Parkinson. To which can be added the clause – and if that still isn’t sufficient, invent work. Perhaps we should have a Royal Commission to determine whether there is now such an over supply of organisations to protect the consumer that they are becoming counter-productive. Okay, I confess, I’m just looking for a nice cosy job to enhance the pension. Well, if all these people can live nicely off the State why can’t I – then I won’t need to consider bank charges!!

  8. If you take my money without my permission you will end up in court or jail, and worse if i catch you!!. If you take the banks money they charge you a high rate.. seems a fair deal to me.. Customers could always try NOT taking money they aren’t authorised to. The banks though could always STOP people taking it.. My mother always said.. “just say no”

  9. all linked to the “free banking”. Wait and see what happens to the shady side of the economy if people start being charged for bank accounts. Employers will be “pressured” to pay cash

  10. Which should really stick to what the know and understand. Washing machines and telly’s. Even their efforts with cars are embarrassing.

  11. Several industry leaders are heralding the death of “free banking” on our Current Accounts.

    My Crystal Ball therefore predicts a brave new world of retail banking, where:
    customers will be charged a monthly tariff for the privilege of having a Current Account; but
    on the up side, the banks will promise to never ever charge us for using an unauthorised overdraft, bouncing cheques etc.

    Anyone for Never Never Land ??

  12. if you bank and reading this try just implimenting your own rules and put in place technologies that will stop people using your money with out authority. Then you would not have to charge them and could look after your own balance sheets for effectivily.

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