Bank customers saving nearly £1 billion a year in overdraft charges after reforms
Following stints with Reuters and the Press Association, Martin Hickman joined The Independent as a news editor in 2001. He became the Consumer Affairs Correspondent in September 2005 and has run the paper's trenchant campaigns on packaging, bank charges and factory-farmed chicken. He writes on subjects as diverse as food, finance, energy and fashion. With Tom Watson, he is author of a new book on the phone hacking scandal, Dial M for Murdoch - News Corporation and the Corruption of Britain.
Friday 25 January 2013
Bank customers are saving almost £1 billion a year in overdraft charges thanks to reforms introduced after a public revolt against them, but high street providers must do more if they are to escape a competition investigation into their industry, a report warned today.
In a review of the £9bn-a-year market in personal current accounts, the Office of Fair Trading (OFT) estimated that the public was annually saving up to £928 million a year from the lowering of unauthorised overdraft fees between 2007 and 2011.
The Independent led the campaign against the charges, of up to £37 a time, for running up an unauthorised debt of just £1, arguing they were disproportionate. The banks paid out hundreds of millions of pounds in civil settlements to individuals before winning a test case against the OFT at the Supreme Court in 2009.
By then they had already agreed to reform their charges, phasing out the high one-off charges for a more complex but cheaper range of fees.
In its first study of current accounts since 2008, the OFT complained there were still serious flaws with them including the complexity of the reformed overdraft fees and, more notably, the difficulty of switching banks.
Since it last studied the market, it added that some smaller providers had been pushed out of business by the financial crisis, leaving the biggest players - Lloyds, RBS, Barclays and HSBC - with 75 per cent of the market.
The Government regulator concluded: “Overall, a combination of a lack of competition, low levels of innovation and customer apathy in the face of unclear costs and a lack of diversity in the choices of current accounts available mean that this market is not working well for consumers or the wider economy.”
It expressed hope that the forthcoming sale of Lloyds and RBS branches, better comparison of financial products, and a new automated account switching service would give customers a better deal.
As a result it has provisionally decided not to refer current account providers to the Competition Commission for a market investigation, but said it planned “to revisit the question by 2015” – giving the banks two years to improve.
A market investigation by the Competition Commission would have sweeping powers to seize documents and could result in the break up of companies and services.
Clive Maxwell, the OFT’s chief executive, said: “Despite some improvements, this market is still not serving consumers as well as it should. Customers still find it difficult to assess which account offers the best deal and lack confidence that they can switch accounts easily. This prevents them from driving effective competition between providers.”
Mr Maxwell said: “The retail banking sector needs to become more competitive and customer-focused to ensure that further action by the competition authorities is not required.”
The high street banks said they were committed to improving services.
Anthony Browne, chief executive of the British Bankers' Association, which represents the major UK banks, said: "We welcome the OFT's decision not to refer this issue to the Competition Commission and will continue to work with them to make further improvements for customers and the wider economy."
Guy Anker, news editor of Moneysavingexpert.com, which too campaigned against penalty fees for overdraft charges, hailed a victory for consumers, saying that banks had been forced to lower “sometimes hideous fees for the long term.”
He said: "Banks may have won the court case to stop mass reclaiming, but the benefits of the campaign are there for all to see.”
elephant appealThe first 23 lots in our charity auction have now gone. But there are 22 more still up for grabs
Jennifer Lawrence attacks mass media again over body image
scienceScientists find the answer to a question that even puzzled Darwin
A very timely Great Train Robbery and a frantic 24 Hours in A&E among the highlights
Geoffrey Macnab: The Wolf of Wall Street's account of white-collar excess is A Rake’s Progress on steroids
arts + entsThe 'Friends' actor on his new role as campaigner on addiction issues
Sun will 'flip upside down' within weeks, says Nasa
Colin Farrell reveals ‘affair’ with Elizabeth Taylor: 'She was my last romantic relationship'
Children evacuated from swimming pool after prosthetic leg mistaken for paedophile
Devyani Khobragade: India-US row escalates over arrest of diplomat in New York
Peter O'Toole: Tales of the late film icon
Exclusive: Young people ‘want UK to stay in Europe’: Four in 10 adults aged 18 to 24 are ‘firmly in favour’ of membership, poll shows
Fox News presenter tells viewers it is a 'fact' that both Jesus and Santa Claus are white
You can STILL be jailed for being a republican, government confirms, and it remains illegal to even 'imagine' overthrowing the Queen
Kiss and yell: Italian protester charged with sexual assault after kissing riot police officer
Fighting back: the woman giving a voice (and 49,999 others) to the victims of sexism - by giving an airing to their horror stories
PM denies two child limit for benefits is part of Tory welfare policy
- 1 America's 'virgin births'? One in 200 mothers 'became pregnant without having sex'
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Christmas comes early: Justin Bieber announces he's 'retiring from music'
- 4 Children evacuated from swimming pool after prosthetic leg mistaken for paedophile
- 5 Status: Wet - Woman walks off a pier while checking Facebook on her phone
- < Previous
- Next >
£100000 - £120000 per annum + benefits : Pro-Recruitment Group: £££ Derivative...
£70000 - £120000 per annum: Pro-Recruitment Group: Currently recruiting for in...
£68000 - £83000 per annum: Pro-Recruitment Group: Real Estate Finance Lawyer 2...
£89000 - £96000 per annum: Pro-Recruitment Group: Looking for clear career pro...