Banks may pay back £7.2bn

Banks could have to pay £7.2 billion worth of penalty fees back to customers if they are judged to be illegal, a City bank group has estimated.

The Office of Fair Trading is currently investigating bank fees which are charged in situations such as when a customer's cheque bounces or when they go over their unauthorised overdraft. These fees can be as high as £40 and campaigners claim that they are illegal, as the true cost of administration in these cases is far less.

Thousands of people have already claimed these charges back from their bank and Credit Suisse has estimated that if the maximum number of account holders claimed fees back for the past six years, banks could be forced to repay £7.2 billion.

Credit Suisse also calculated that banks could make as much as £1.2 billion per year from penalty charges.

Filipe McManus, who successfully claimed his own charges back before setting up an organisation, Reclaim Bank Charges, to help others do the same said that around five per cent of bank customers have been charged penalty fees.

He said: "I think there always going to be those who won't even get their charges back, but the major issue here is the Limitations Act. That means that any penalty charging claims can only go back six years. That means you can only claim back to 2001, the longer you wait the less you will get."

Banks 'play role in savings education'

Banks are doing what they can to help young people to manage their savings and spending from a young age, it has been claimed.

Karen Garner, a press officer for HSBC, said that it was good to start saving at an early age and to get into the habit of comparing what different banks have to offer.

Banks are trying to educate children on getting into the habit of keeping their savings and spending money separate, she explained, as well as making it easier to transfer the money between the two accounts.

She commented: "So as they get older, they've already got into the habit of managing two accounts and doing what [people] do in older life."

Those going straight from school to work would already have a head-start in terms of savings, she added, with the banks trying to help people understand that there are benefits to saving as well as spending.

Ms Garner also said that for other age groups there were different options, with student accounts offering those in education interest-free overdrafts to help with accommodation and other costs.

Research from the Personal Finance Education Group found that 90 per cent of teenagers worry about their spending but think of overdrafts and credit cards as a way of spending more than they have.

Insurance Limited “Whilst we respect this observation it is unwise to take it at gospel. The online savings market is growing and at a rapid pace and is the main area for cost cutting, and with cost cutting the Consumer wins.”

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