The Money Programme "bank commission"
Most lenders impose hefty penalty charges on their customers.
Having failed to get even a rough indication from any of the major banks about how much it costs them to process their customers' defaults, we decided to set up a commission of experts to try to answer the question.
We deliberately avoided campaigners and prominent critics of the banks.
Instead we chose two eminent business academics Prof Philip Molyneux of the University of Wales, Bangor, and Prof John Struthers of the University of Paisley, and an experienced banker, Ian Jarritt, formerly a senior executive with NatWest.
We asked them to work out the highest costs they thought banks could possibly justify for dealing with defaults, taking every relevant expense into account.
Our commission began work in October and met in London a month later to reach their final conclusion.
They decided that the highest cost banks could justify for bouncing cheques (the most labour-intensive procedure) was £4.50.
For other items, such as bouncing direct debits or dealing with unauthorised overdrafts, the commission judged £2.50 to be the highest cost banks could reasonably justify.
Both figures are vastly lower than the average £30 penalty banks have been charging for defaults.