'Unjust' bank charges criticised

There are big differences in fees

There are dramatic differences between the unauthorised overdraft charges levied by UK banks, research from Moneysupermarket.com has found.

The cost of going £60 overdrawn can vary from £25 to £133, depending on which bank the account is held in.

Moneysupermarket.com branded the structure of UK bank charges as lacking "consistency" and being "unjust".

The Office of Fair Trading (OFT) is investigating bank charges, while many bank customers are suing for refunds.

In response, the banks say customers who stay in credit get a good deal.

Wide variations

It is clear several banks are playing an unjust game Kevin Mountford, Moneysupermarket.com

Moneysupermarket.com, a comparison website, looked at the charges levied by the main UK High Street banks and the Nationwide building society for exceeding an authorised overdraft limit by £60 through bouncing three cheques in the space of a month.

They found big differences in charges.

For example, HSBC would charge its customers just £25 while Halifax, Alliance & Leicester and NatWest all imposed fees of over £100.

In total, the difference between the highest (NatWest) and lowest (HSBC) was £108.

PENALTY CHARGE FEES HSBC £25 Nationwide BS £84.50 Barclays £90 Lloyds TSB £90 Halifax £118 Alliance & Leicester £125 NatWest £133 Source: Moneysupermarket.com

"The wide variation between penalty charges shows there is no consistency across the board and I wonder how the banks can justify the differences we have uncovered," Kevin Mountford, head of savings at Moneysupermarket.com, said.

"It is clear several banks are playing an unjust game," he added.

However, in response, the British Bankers' Association (BBA) pointed out that customers could avoid fees altogether by staying in credit.

"The UK is one of the very few countries where you can get free banking simply by keeping your account in credit or within an agreed overdraft limit," a BBA spokesman said.

"In most other countries people pay for all their banking services including everyday transactions that here we take for granted," he added.

Furore

There is a major furore over bank charges at present.

Thousands of UK bank customers are suing their banks claiming unauthorised overdraft fees are too high and may be illegal.

Although settling most cases out of court, banks have responded robustly to the challenge.

Some banks have increased their fees for going into unauthorised overdraft, while others have closed the accounts of customers who are suing them.

In addition, some leading bank figures have hinted that if unauthorised overdraft charges are capped then they may start charging for everyday banking services or impose a regular monthly fee.

The OFT is currently looking at bank charges and so called "free banking".

Ultimately, it may impose an industry-wide charges cap.