13 December 2006
Consumers have been left angry by a BBC Money Programme investigation which has revealed that many of the most popular banks are charging up to £30 for a service which only costs them £4.50.
Banks are charging their customers extortionate amounts for going into their overdrafts on their current accounts in but the vast amounts that they are charging cannot be justified as the largest amount that the banks are reckoned to be spending on each occurrence is a mere £4.50.
The revelations have caused uproar among consumer groups which have since branded the penalty charges as 'illegal', opening the doors to the possibility of legal complaints and compensation.
Nick White, director of personal finance at the price comparison and switching website uSwitch.com, said that it was only a matter of time before the banks were exposed.
"It is clear that these charges are currently playing an important role in bolstering banks' profits and will continue to do so unless the Office of Fair Trading (OFT) takes a tough stance on capping them," he said.
The OFT has since launched an investigation which could see the banks being forced to cap penalty charges at £4.50, as they are only allowed to charge the administration costs, not incur a penalty.
Mr White said uSwitch.com would "welcome any developments that improve the transparency of charges, and make it easier for consumers to compare products and how much they are likely to cost".
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