Banks give with one hand and take with the other

The clampdown on charges for a variety of everyday financial products has had the opposite effect – actually bringing an increase in the number of fees.

moneysupermarket.com reveals Brits face running a gauntlet of 112 charges across just five financial products – mortgage, current account, savings product, loan and credit card. A year ago consumers faced 110 penalties.

Stuart Glendinning, managing director at moneysupermarket.com, said: “It is galling that people are facing more penalties than last year, despite the OFT and FSA turning their attention to the issue. I am staggered that, despite intense media and regulatory attention, the majority of financial services providers are yet to make positive moves to reduce their charges.

“It is unbelievable that five financial products can be the root of so much penalty pain. With so many default fees and charges in place, even the most astute consumer can fall foul. People deserve financial penalties to be transparent and fair from the outset.”

Mortgages

Mortgages now account for a shocking 51 different penalty charges – the highest number for any financial product. Despite the FSA’s good practice statement on exit administration fees, the research shows some providers are simply introducing other fees in their place, such as Abbey's core fee of £225.

Consumers are being charged for standard administration requests such as asking for a copy of title documents, which can be up to £40. Mortgage lenders charge up to £75 to change the repayment method.

Credit Cards

The OFT-imposed £12 cap was introduced to ensure credit card penalty fees were fair. However, consumers have seen an increase in the charges they face from 17 to 19 in only 12 months. So although consumers do not face a single fee greater than £12, they now face more of them.

Current Accounts

Given the level of scrutiny in this area, it is disappointing to see there hasn’t been a significant drop in the charges some current account holders face. Although there has been a small reduction from 29 to 27 – regulators and consumers alike would have hoped for a better outcome. Fees can reach £30 for going over the agreed overdraft limit, and £39 for a bounced payment.

Loans

There are 11 penalties in place on loans, ranging from early settlement fees (which roll up additional interest) to late payment fees of up to £30. In addition, unpaid direct debit or returned cheques can cost consumers £35 per item.

Savings

Savings accounts account for just four penalty charges. These include withdrawal penalties which can result in the account being closed or loss of the advertised AER after a set number of withdrawals, and charges for not depositing the minimum amounts as set by the terms of the account.

Stuart Glendinning added: “A year on and providers are still giving with one hand and taking with the other. It is understandable that banks want to make up any profit lost by the clampdown on fees. But we are seeing sneaky tactics by some providers, who are renaming charges or introducing a new fee in their place – a practice that doesn’t treat customers fairly.”