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The BBC's Peter Morgan reports
"This evenings announcement has taken the big banks by surprise"
 real 28k

Friday, 25 February, 2000, 17:11 GMT
Cash machine charges slammed

cash machine
The average cash machine is used 206 times a day

Banks should be allowed to charge no more than 30p to use their cash machines, a government inquiry into banking has recommended.

Those which charge more should be referred to the Competition Commission for an in-depth monopoly investigation, said the report's author, Don Cruickshank.

The draft report condemns what Mr Cruickshank believes to be overcharging for cash-machine withdrawals and urges greater transparency in making customers aware of charges.

Some banks currently charge customers a "disloyalty fee" of as much as 1.50 for using cash machines other than their own.

However, the report reveals that the real cost of running the machines works out at just 29p per transaction.

'Discriminatory prices'

The draft report is part of a review of UK banking being prepared for Chancellor Gordon Brown.

It accuses banks of charging "very high and discriminatory prices for withdrawing cash" at automated teller machines (ATMs).

don cruickshank Don Cruickshank condemns the current mark-up
Mr Cruickshank said: "The recommendations in my report, if implemented, would open up to greater competition the markets for cash distribution and current accounts.

"This would bring ATMs into new locations, enable a wider range of services to be delivered through ATMs to customers and allow new suppliers to compete on a level playing field.

"Prices would be disclosed to customers when they need the information, making it impossible for suppliers to hide high charges.

"Most customers would, as at present, be able to withdraw cash from at least some ATMs for free.

"The current large differences in the prices paid by consumers for cash withdrawal, according to where they hold their current account, would disappear.

"In their place would be much smaller differentials of between 15p and 30p which more accurately reflect the cost."

The report says the Link system of cash machines is "inefficient, anti-competitive and socially exclusive".

Mr Cruickshank says there is "a strong case for government intervention to remedy these failures."

Link dispute

The news comes as Barclays is considering a new system of charges.

The bank is in dispute with other banks and building societies belonging to the Link network because it proposes charging non-Barclays customers 1 for using its machines.

This means some customers could be charged a disloyalty fee of 1.50 by their own bank as well as the Barclays 1 charge.

The supermarket chain Tesco has threatened to remove Barclays' cash machines from its premises if such a move is implemented.

Mr Cruickshank says Barclays' plan would "produce an even worse outcome" for the consumer.

Barclays says it is trying to simplify the system and offer customers more honest information about charges.

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See also:
23 Nov 99 |  Business
Q&A: Cash machine charges
23 Nov 99 |  Business
Banks consider cashpoint charges
17 Sep 99 |  The Company File
Nationwide to sue Barclays over ATM charges
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