Julian Knight: The OFT must hold its nerve and put a cap on bank fees

I remember the pre-Northern Rock crisis days when the only thing we worried about was rip-off charges. Three years ago, as tens of thousands of consumers started suing their banks for the return of previously imposed penalties, it felt like an earthquake was rippling through the banking industry.

If only we had known that this debate – which became quite poisonous due to the macho posturing of the banks in treating both claims and an official investigation with contempt – was little more than a warm-up act before the credit crunch and recession engulfed us.

But last Thursday, the charges row sparked back into life in the Court of Appeal when the banks lost their latest attempt to stop the Office of Fair Trading (OFT) ruling on whether the fees are fair or unfair. At once, emails from triumphant consumer groups started flying into my inbox saying how the banks had to refund the charges now.

I'm afraid, though, that their optimism is premature. We all know the world is very different now and many banks' balance sheets are in a terrible mess. The OFT and the Financial Services Authority – which has frozen all consumer claims – know that draining resources from the banks at this time will only create more market uncertainty and be viewed with alarm by Whitehall. Meanwhile, the marketing departments of the big banks have been busy confusing the issue by introducing all sorts of caveats that will make their fees seem fairer without, of course, damaging the income stream too much.

The OFT is looking at all this and needs to hold its nerve. We need a cap on charges similar to that imposed on credit cards a few years ago. It doesn't have to be pennies, as some consumer campaigners are demanding; after all, it isn't right to use other people's money without their permission, which is what an unauthorised overdraft comes to. However, the fees must be fair and proportionate and the evil of charges that trigger further charges has to stop.

Hard to swallow

You have to feel for shareholders in the old Lloyds TSB. Their bank, although exposed to some toxic debt, was still able to turn a profit last year. However, that has been dwarfed by the staggering losses at HBOS, the dead man walking into whose arms the Lloyds investors were frog-marched. I can't help but remember a comment made to me by a leading Spanish banker when the Lloyds-HBOS merger was announced. He said it was like "a snake swallowing a poisoned bull".

Pensions off limits

On the subject of bull, we have Sir Fred "the shred" Goodwin's pension. Of course it is odious – the size of it and the circumstances – but I don't agree with those who suggest that legislation should be introduced to allow the Government to confiscate a private individual's pension. Regardless of how greedy or incompetent that person might have been, do we really want a legal precedent giving a government such powers?

The problem clearly lies in the system of executive pay and benefits, and the gap between boardroom and shop floor that has been allowed to grow from a gulf into a giant chasm, over the past 10 years in particular. Let Sir Fred (pictured) have his pension; his reputation is toast.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Those who were encouraged to walk in a happy manner remembered less negative words
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Helpdesk Analyst

    £23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

    Senior Helpdesk Analyst / Service Desk Co-ordinator

    £27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

    Senior Pensions Administrator

    £23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

    Corporate Actions Administrator / Operations Administrator

    £25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

    Day In a Page

    Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

    A new American serial killer?

    Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
    Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

    Sting to trap paedophiles may not carry weight in UK courts

    Computer image of ‘Sweetie’ represented entrapment, experts say
    Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

    Return to Fukushima – a land they will never call home again

    Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
    Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

    Wildlife Photographer of the Year

    Intimate image of resting lions claims top prize
    Online petitions: Sign here to change the world

    Want to change the world? Just sign here

    The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
    Ed Sheeran hits back after being labelled too boring to headline festivals

    'You need me, I don’t need you'

    Ed Sheeran hits back after being labelled too boring to headline festivals
    How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

    How to Get Away with Murder

    Shonda Rhimes reinvents the legal drama
    A cup of tea is every worker's right

    Hard to swallow

    Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
    Which animals are nearly extinct?

    Which animals are nearly extinct?

    Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
    12 best children's shoes

    Perfect for leaf-kicking: 12 best children's shoes

    Find footwear perfect to keep kids' feet protected this autumn
    Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

    Arsenal’s ray of light ready to shine again

    Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
    Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

    Moyes’ show of sensitivity thrown back in his face... by Ferguson

    Manchester United legend tramples on successor who resisted criticising his inheritance
    Two super-sized ships have cruised into British waters, but how big can these behemoths get?

    Super-sized ships: How big can they get?

    Two of the largest vessels in the world cruised into UK waters last week
    British doctors on brink of 'cure' for paralysis with spinal cord treatment

    British doctors on brink of cure for paralysis

    Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
    Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

    Lonely Planet’s Best in Travel 2015

    UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London