Banks could reveal overcharge costs by summer
by Elaine Frei
There is a possibility that banks could be forced to reveal just how much they have paid to customers in claims for overcharges when they report interim results later in the year. So far they have refused to disclose exactly how many claims have been made and how much they have been forced to give back, but it might be that they have had to pay out so much to disgruntled customers because accounting rules make it necessary that companies - including banks - tell their investors about any potential liabilities. Some banks might try to hold off on the disclosure until full-year results are reported, but since the rules require that the disclosure of liabilities be made as soon as they are clear, some might disclose amounts when half-year results are reported.
The amounts involved could be substantial. Consumer group Which? has calculated that bank customers pay around £4.7 billion per year in penalties on such things as overdrafts and bounced checks. These charges are as high as £28 per day for an overdrawn account and £39 for a bounced check. Under the rules, customers can request repayment of what they consider to be excessive fees for up to six years in the past. These charges currently subsidize free banking for customers who do not overdraw their accounts or write bad checks.
The banking sector is looking at changes that would cut penalties fees to a reasonable amount - £12 is a commonly mentioned maximum - or would charge fees to maintain accounts. Another possible alternative could be to levy a per-service charge, possibly 10p to withdraw money from an ATM and 30p for each check written. This consideration of alternatives comes as the Office of Fair Trade is conducting an inquiry into how banks presently charge customers, an investigation which focuses on current accounts and has been prompted by a growing number of complaints that the penalties fees banks charge are currently too high. The OFT is not expected to release its conclusions until the end of the year.
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