26 April 2007
Today marks the start of an in depth investigation by the Office of Fair Trading (OFT) into claims of unfair charges handed out by high street banks.
While this is likely to be a positive move for consumers, analysts have predicted that it could lead the OFT to recommend that banks charge an annual amount for holding a current account with them, essentially putting an end to free banking.
Those in favour of charging for current accounts argue that there is no such thing as free banking anyway as banks are increasingly charging large amounts for bank services like bounced cheques and overdraft charges.
"We want greater transparency in what you get and what the charges are," an OFT spokeswoman told the BBC. "This will be the most wide-ranging study into personal banking to date."
This line of thought was echoed by the OFT's Chief Executive John Fingleton, who told Reuters: "We wouldn't want to do anything that would result in consumers paying more, but [if] consumers have to pay more upfront fees in order to have hidden fees removed, [this] is something we should look at."
Results of the investigation are thought to be announced before the end of the year.
Mike Naylor, Personal Finance Expert at independent price comparison and switching website uSwitch.com, commented: "In order to maintain a level of stability within the banking industry, it's really important to look at the bigger picture as the knock on effect of the decisions made could be phenomenal.
"Recent research from uSwitch.com has shown that almost 19 million people have been hit with a total of 159 million chargeable events, generating an income of £4 billion for the banks," he continued, concluding that the most probable outcome would be a cap on default banking charges - ending free banking.
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