Banks' £30 Penalty On £2.50 Service
Banks are charging customers £30 in penalties for a service that costs them just £2.50, a new study has revealed.
BBC2's The Money Programme looked into allegations that financial institutions were overcharging customers who default on payments.
It found that it costs banks no more than £4.50 when a customer's cheque bounces and a maximum of £2.50 to deal with unauthorised overdrafts.
But despite the low cost incurred by banks, customers received penalty charges of around £30 in relation to unauthorised credit.
The issue has led to calls for regulators to step in, amid allegations that banks are breaking the law by charging more in penalties than it costs to process defaults.
Stephen Hone, campaigner and founder of penaltycharges.co.uk, told the programme: "It clearly shows the banks have been scamming people for years on these charges and they are totally unlawful, so it shows people that they can go back and claim their money back."
In recent months, disgruntled consumers have been prepared to take their banks to the small claims court to reclaim money taken from them in penalties.
Some 180,000 template letters threating banks with court action have been downloaded from MoneySavingExpert.com in just a month. But to date not one claim has gone to court, with banks eager to settle.
Barrister Kieron Beal of Matrix Chambers noted: "It is odd that they have not chosen to fight a case to date. It does suggest that perhaps they are finding it difficult to justify the charges that they impose upon their customers."
SubhanAllah, according to that my bank owes me a few bob!
