David Prosser: How dare A&L kick its customers out?

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The Independent Online

The row over penalty charges began last summer. For years, current account holders at almost all the banks have seethed about having to pay fees of £25 or more for bouncing a cheque or going over their overdraft limits. Then, last August, a customer at Abbey decided to challenge such charges in the courts - and won. Since then, several hundred people have taken legal action against the banks. And in April, the Office of Fair Trading warned that penalty fees of more than £12 were illegal, because while banks are entitled to recoup their costs when customers breach the terms of their accounts, they must not make a profit from such charges.

For now, the OFT's ruling is binding only on credit card lenders - though current account providers are likely to be the next target. In the meantime, A&L and the other banks are therefore continuing to apply their outlandish penalty fees and will do so for as long as they think they can get away with it.

Not surprisingly, the legal challenges keep coming, mostly through the small claims court. A&L's new policy is not to contest such cases - it simply refunds the disputed penalty charges - but to close the accounts of customers who have taken the action.

A&L's argument is that customers were told what the charges would be when they first opened an account - and that the cost of fighting cases is prohibitive.

What rubbish. The reason it doesn't fight these cases is that it knows it will lose. To kick out customers who are just exercising their legal rights looks like sour grapes of the worst kind.

A&L's behaviour is particularly disappointing because it is one of a handful of banks that in recent years has shaken up the current account market, offering decent rates of interest both when customers are in credit and when they're overdrawn. This mean-minded attitude towards consumer rights has undone that good work at a stroke.

* Watch out for unsolicited telephone calls from dodgy investment companies trying to sell you worthless shares. The Financial Services Authority, the chief City regulator, says "boiler rooms", overseas operations that use high-pressure sales tactics, are stepping up their attempts to target UK investors. What's striking about the boiler room scandal is the profile of the victims caught out so far. The FSA says the average victim is an experienced investor with a good understanding of financial markets - the average loss is £20,000.

In other words, boiler room salesmen are persuasive and good at hoodwinking their targets. So you must be on your guard. Don't do business with any company that you have not checked out first with the FSA. In you're in any doubt at all, hang up the phone.

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