Is it the end of free banking? You bet!

17 January 2008

I've been following this 'unlawful bank charge' saga with great interest over the past year. From the windfalls of £10,000+ scooped by the lucky few, to the smaller wins won by the average joe. But today the test case gets underway. The Office of Fair Trading is taking on the likes of Abbey, Barclays, Clydesdale, HSBC, HBOS, Lloyds TSB, Royal Bank of Scotland and Nationwide to get them to defend charging customers up to £35 for exceeding their overdraft limit, or bounced cheques.

Call me cynical, but the banks will win whatever the outcome.

If the banks win, the £35 charge will continue and there will be outrage from those still waiting for a refund for not running their accounts like they should. I don't agree with such a high charge, but I really don't have much sympathy for people who 'spend it like Beckham'. It's not your money when all's said and done, so why do it!?

But lets say the OFT wins. The judge rules that the charges are unfair and that they must be brought down to a level which only covers the cost of administrating such misdemeanours. Everyone celebrates whilst the banks go back to their swanky Docklands offices with their tails between their legs. But the victory will be short-lived, because no sooner after the champagne runs dry in Martin Lewis' office, and in an effort to reclaim their costs in some way they'll bring in a charge to run our accounts.

For years in the UK we've enjoyed the luxury of free banking. If we're good with our finances we take it for granted that we can run our current accounts for pretty much nothing. We can use whatver ATM we choose (don't ever use those pub ones, I lost £3,000 through fraud doing so once, and never again, but that's a story for another day), we can transfer money for free and we get sent statements etc for free. My mum lives in Barcelona. Over there you have to pay your bank a monthly charge (roughly £7 I think) for running your account, and you can only use ATMs that your bank provides. But over there the rules regarding overdrafts and credit cards are much stricter.

Don't get me wrong, I don't agree with a charge for banking and I think banks should be falling over backwards to get us to bank with them. But with this 'credit crunch' continuing, I just have this really horrible feeling that 2008 will be the year free banking in the UK dies.