BizAims

Most people do not want to pay a monthly charge for using their bank account even if it means a fairer banking system without unfair overdraft fees.

In a blow to the campaign for fairer banking fees, led by This is Money, the new research from price comparison website Moneyexpert.com shows that 58% of people will not accept an end to free banking no matter what the outcome.

Banks are widely predicted to introduce current account fees should they lose their current High Court battle against the Office of Fair Trading (OFT), thereby facing billions in lost revenue from the high charges they slap on unauthorized overdrafts.

But a silent majority who say they would rather keep fee-free accounts at the expense of others being heavily charged are not being heard following the recent ruling that gave the OFT the green light to assess overdraft charges for fairness, says Moneyexpert.com.

The website commissioned research which quizzed 1,000 customers on their attitudes to charges.

It said the majority of bank customers do not pay high penalty charges for falling into the red – the study estimates this could be as high as 80% of customers – and therefore believe they will be worse off if current account charges are brought in across the board.

The High Court case heard that banks receive around £3.5bn worth of unauthorized overdraft charges each year.

Opposition to current account fees is highest among customers who have never faced punitive charges and could be as high as two-thirds, it said.

Out of the 39% who would be willing to pay a monthly fee for banking services, a quarter would only be willing to pay £1-5, while just 9% would be willing to pay between £6-10.

Their view has hardened over the past year, as the average bank customer was willing to pay £7.29 a month for banking services a year ago.

Sean Gardner, founder of MoneyExpert.com, said: 'The recent announcement provoked a huge amount of excitement, yet it's worth bearing in mind that this legal battle is far from over. We still have to wait for a further hearing - which might not be until next year - before it is decided by the court whether or not the charges are unfair.

'And the banks actually persuaded the judge that these are service charges, not penalty fees, meaning the fee they charge for unauthorised overdrafts doesn't just have to cover their costs.

'Given that most people would prefer not to see the end of free banking and would only be prepared to pay a modest monthly fee, the majority of bank customers stand to lose if the banks eventually lose this case.'

But campaigners came out in support of the 'reclaim charges' campaign and argued the abolition of extortionate unauthorised overdraft fees will benefit all bank customers.

Ricky Bruce, current account expert with price comparison group Moneyfacts.com, said: 'I'm not so sure that only a small number of people are affected by these charges. Anecdotally, almost everyone I know has been charged at some point. If they are a minority, then they are a significant minority.

source: news.myspace.com