Bank accounts 'not working well'

[Legal Beagles]

Personal current accounts are not working well for consumers, the Office of Fair Trading says.

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[enaid]

Re: Bank accounts 'not working well'

Blimey!!! some sense at last...........................

Bank accounts 'not working well'


The OFT believes customers are reluctant to switch bank accounts.


Personal current accounts are not working well for consumers, the Office of Fair Trading (OFT) has said.
In a report, the regulator said much of the banks' revenues in this £8bn industry were "derived opaquely".
The OFT said 81% of income came from charges levied on customers with insufficient funds in their accounts and from interest payments.
In addition, many customers did not know how much they pay in bank charges, the report said.
The report also found that more than three-quarters of customers did not know the interest rate of their current account.
The OFT said that the complexity and lack of transparency of current accounts made it hard for customers to compare accounts from different banks. As a result, just 6% of customers surveyed by the OFT had switched accounts in the past 12 months. John Fingleton, chief executive at the OFT, said: "Personal current accounts are a vital gateway to effective participation in the economy. But this market is not serving consumers well."

[Legal Beagles]

OFT slams high street banks over 'complex' current accounts

The Office of Fair Trading has attacked Britain's high street banks for generating more than £8bn a year from current accounts that are too complex and fail to offer customers transparency.

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[Legal Beagles]

OFT: Banks make more than £200 a year from each customer

Banks make more than £200 a year from each customer, according to an Office of Fair Trading report, which exposes the myth of free banking for all.

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[Amethyst]

Re: OFT: Banks make more than £200 a year from each customer

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OFT: Banks make more than £200 a year from each customer


By Harry Wallop, Consumer Affairs Correspondent
Last Updated: 3:26pm BST 16/07/2008


Banks make more than £200 a year from each customer, according to an Office of Fair Trading report, which exposes the myth of free banking for all.
Read the OFT report in full
The Government watchdog has attacked the banks for their "complex" terms and conditions, which leave customers in the dark about how much they are being charged.

As many as 1.4 million people are paying over £500 a year in charges and these customers are frequently 'vulnerable', low income and low saving customers.


In total the banks make revenues of £8.3 billion every year from the estimated 40.5 million adults who have a current account – equating to £205 a year.




While the OFT acknowledges that banks are entitled to make a profit from its customers, the report is scathing about how banks make this money.
It is particularly critical of lenders that charge a high level of interest on overdrafts, but offer negligible or no interest at all on money deposited in customers' current accounts.





John Fingleton, the director general of the OFT, said: "It is a type of stealth payment."
The banks have a few months to respond to the findings, but if they fail to make changes the OFT has threatened to introduce new rules to force them to change their practices.
The report comes less than a week after The Daily Telegraph disclosed that overdraft rates hit an eleven year high last month.



Personal finance experts welcomed the report but warned that it spelled the end of so-called "free banking".


Andrew Hagger of the website MoneyNet said: "Those that fall foul of the providers' complex and punitive charging structures end up providing free banking for the masses.
"If and when the decision is made to cap the current unauthorised overdraft fees and unpaid charges it is inevitable that we will move towards paying monthly or annual fees for our personal banking."
He pointed out that some customers could end up paying more than £100 in interest charges if they went over their overdraft limit by £200 for just five days.



Banks defended their business models and claimed that their charges were some of the cheapest in the world. If they had to drop overdraft charges they could be forced to introduce other ones.





Angela Knight, chief executive of the British Bankers Association, said: "Yes, you can incur charges if you do things without making arrangements first but do you really want to pay for ATM use, pay for statements, pay for direct debits in this country? Surely people don't.



"The Office of Fair Trading unfortunately does need to perhaps look at that balance as far as its report is concerned."

[Legal Beagles]

OFT threatens banks with greater regulation

Consumer watchdog finds that poorer customers subsidise those that are better off, and that customers are unaware of the charges they face

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