Abbey tops the league table of bank rip-off fees with £230 a year
Bank customers have been charged an average of £742 in ‘illegal’ penalties over the past six years, it was claimed today.This figure covers fees for ‘breaches’ such as unauthorised overdrafts, bounced cheques and unpaid direct debits.
The finding comes as the banks’ legal teams prepare for a High Court showdown in January that will decide whether they have a legal right to deduct the charges.
The most aggressive of the ‘big five’ high street banks, according to the study, is Lloyds TSB, where an average customer will have paid £800 over the past six years. However, this is dwarfed by Abbey, where the average charges have been £1,376, or £230 a year.
Across all the banks, around one customer in 20 has been charged at least £2,500 - more than £1 for every day they held their account.
Mike Naylor, personal-finance expert at online comparison service uSwitch.com, said: “All in all, these charges have provided a very lucrative income for the banks, totalling £8.6 billion for the big five in the last six years.
“Needless to say, this income will certainly be missed if the outcome of the test case isn’t in the banks’ favour.”
The figures come from interviews with more than 4,000 customers by polling company YouGov for uSwitch.
They suggest that around four out of 10 of the banks’ 45 million customers have incurred penalty charges since 2001. The charges, of up to £39 a day, were mainly for going overdrawn or beyond an overdraft limit without permission, but also for bouncing cheques and other ‘administrative’ tasks.
Eddie Weatherill, spokesman for the Independent Banking Advisory Service, said that “as an average £742 might sound relatively reasonable. But I’m dealing with a case at the moment of someone who was charged £300 in a month and a half.
“One would expect to pay something for a basic service but if you’re penalised for a poor service-that’s a different ball game.”
The uSwitch figures were dismissed as ‘nonsense’ by the British Bankers Association. Chief executive Angela Knight said: “It is an audited fact that 80 to 85 per cent of people get their banking completely free.”
Hundreds of thousands of customers have been refunded charges after threatening to take banks to court. But all outstanding claims - thought to be worth more than £700 million - have been frozen pending the outcome of the court case.
In the first six months of this year the ‘big five’ made joint profits of nearly £4 billion from their UK branches.
Banks are only allowed to recoup costs when customers break bank account terms. The banks have refused to provide a breakdown of the costs of dealing with an unauthorised overdraft, but independent research suggests it could be as little as £2.
The Office of Fair Trading is also investigating bank charges but has deferred its report until after the High Court ruling.