Bank charge cases a bigger threat to UK than stock falls

| August 10, 2007 | 1 Comment
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Today we’ve seen the FTSE 100 and other major stock indices tumble as the shockwaves from the housing and subprime mortgage market collapse in the USA.

These shockwaves are likely to impact the ordinary UK consumer in a number of ways - there’s a danger of pension funds being adversely affected at best, and a threat of recession at worse.

Either way, the effects from this are short-term - as the economic cycle turns again, losses will be made good again through improved market and economic conditions.

Not so with bank charges.

So far, UK banks stand accused of implementing illegal charges made to those who mismanaged their finances. Some would even go far as to say these credit defaulters were effectively subsidising banking services for those who stayed in credit.

The UK courts are going to hear - and rule - on a test case soon, that will allow the issue to be settled once and for all: were these charges made at cost, or at profit?

There’s every indication that the banks will - to some degree - be found to have made profits from these charges. Which is illegal.

The problem for everyone else is that without these charges, the banks will look to recuperate profits from elsewhere. And the simplest way to do this is to end the long tradition of free banking in the UK.

In other words, because a minority of people were unable to manage their personal finances, everyone else is going to carry the can.

And once the UK banks start to apply various charges for people in credit, that’s it. The charges stay. It’s effectively a permanent change in banking practice that will effect everyone for the rest of their lives.

Unlike the current sub prime mortgage collapse, and all the implications with that, no turn of the economic wheel is going to reverse a decision to implement charges on current accounts, which are in credit, once that decision is made.

So when you read about individuals challenging bank charges, you may well have thought of them as “people’s champions”. After all, the individual ordinary consumer against the billion dollar banking giants is surely a modern David and Goliath tale?

Unfortunately, it’s not. If forced to move those charges elsewhere, that’s all that the banks will do.

And then those supposed people champions will be shown for what they are - people who can’t take responsibility for their own money, and therefore force everyone else to pay for someone else’s mistakes.


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  1. david lee says:

    Brian Turner should THOROUGHLY research before putting pen to paper about his opinions on bank charges.
    A Head Executive of one of the big banks here in the UK has actually admitted on record that the bank charges taken from certain customers actually subsidise free banking for other customers, in other words, we who have the least money and the most to lose actually SUPPORT those who have the most money and least to lose to the banks.
    I am fed up of getting all the blame from those ignorant to the true facts of bank charges, those who I actually support when paying unfair charges.
    Do your research before opening your big mouth.

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