Monthly Archives January 2008

Unlawful Bank Charges – What’s the Alternative?

It’s all over the news and I heard Martin Lewis (MoneySavingExpert.com) getting quite emotional on the radio today about unlawful bank charges.

Of course we’d all love to have totally fee free banking and yes it’s true banks don’t only make money by charging fees. Here’s an informative thread on the consumeractiongroup.co.uk forum http://www.consumeractiongroup.co.uk/forum/campaign/47583-how-banks-make-their.html.

The recent events focus primarily on overdraft charges that are imposed when a customer exceeds their agreed limit.

If banks didn’t do something when people exceed their limits some might become more irresponsible with their spending knowing they wouldn’t be penalised.

Is it fair to let banks foot the bill for sending out a letter to inform people they’ve overspent? Probably not. So the issue isn’t the existence of charges, merely the amount.

If banks decide to abolish these charges and impose a monthly or annual account fee then a large number of people who have never exceeded their limits and always live within their means will be unfairly charged.

But, is this all a lot of fuss about nothing? I’ve heard many stories about people being charged under circumstances that were most definitely not their fault resulting in debt and further charges but equally I’ve heard of lots of people successfully claiming back the charges with a simple phone call.

Admittedly most of these happy endings have started to materialize since the advent of the bank charges bandwagon (or at least, we’re hearing more about them…) so it’s hard to deny that making a claim is a worthy exercise.

But should people have to go through the process of making a claim every time they step over their limit?

Irresponsible spending should be countered with some kind of deterrent whereas charges for accidental overspending should be refunded at least in part if not fully and banks should (as many already do) help customers in difficulty to get back on track instead of spiraling into further debt.

If banks simply reduced their charges then those who knew they’d overstepped might not think it so unfair and some might not even bother trying to reclaim them and provided the banks continue to reverse those charges deemed genuinely excessive or unlawful, wouldn’t that seem reasonable?