OFT opens wider study into banking charges

| April 26, 2007 | 0 Comments
OFT opens wider study into banking charges

In addition to a continuing look into how banks charge for bounced checks and unauthorized overdrafts, the Office of Fair Trading has announced that it will conduct a wider investigation into other charges banks levy on customers. The OFT says that the study is needed because many people have no idea how much they really pay for “free” banking, and it wants to bring greater transparency to what bank customers are charged for which services. A spokeswoman called it “the most wide-ranging study into personal banking to date.”

The OFT began a formal study into overdraft and bounced checks charges in March after having looked into the issue informally for half a year after accusations began to surface that such charges were too high. The new, wider study is being undertaken because the OFT feels that the complete structure of personal banking should be examined before it issues any recommendations for change. This feeling comes from a fear that if it makes recommendations in just the area of overdraft and bounced checks charges, the banks might well simply reduce charges there and raise fees in other areas.

There is a chance that the study could lead to a recommendation that banks begin to charge customers an annual fee, which would mean an end to the principle of free banking in the UK. However, the OFT’s chief executive has said that his organization does not believe that banking is really free, but that charges to some customers merely subsidize the cost of accounts for those who do not overdraw their accounts or write bad checks.

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