Banks may face charges probe

Banks that charge extortionate fees to customers who accidentally go overdrawn or bounce cheques could be facing a full-scale investigation.

The Banking Code Standards Board (BCSB) claims that people who run into financial difficulties are neither getting a fair deal nor being treated sympathetically by the banks.

Many banks and building societies charge up to £25 for customers who slip into the red without authorisation. Some also charge for a letter from the manager and levy fees for a period both before and after the unauthorised overdraft for every transaction made. Such charges only serve to exacerbate the problem making customer’s financial situation worse.

Chief executive of the BCSB, Seymour Fortescue, said: "I think a lot of banks behave fairly sensibly but we do get some real horror stories - and if you go to the Citizens Advice Bureau they have a huge number of people going to them with financial difficulties."

In the BCSB’s annual report, one in ten of the complaints made by customers related to banks’ handling of debt and financial difficulties. Mr Fortescue said that for someone experiencing financial difficulties £25 could make a big difference to their budget.

Running a close second in the most complained about issues was customers’ concerns about confidentiality of their details, particularly information passed on to credit reference agencies.

During the year the BCSB had investigated claims of low rates of interest paid by 53 banks and building societies. In one of the cases the BCSB had succeeded in persuading a bank to pay higher rates of interest on certain accounts. (SP)