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Are banks letting you down? By Jeff Salway
Banks and building societies have been accused by the National Consumer Council (NCC) of 'crippling' low-income customers by creating a current account jungle with excessive charges and too little useful information. Carl Belgrove, National Consumer Council We believe that current account fees and charges are an unfair burden on vulnerable and low-income customers. People who go overdrawn without permission are hit by disproportionate charges and forego interest, so the debt snowballs, making it even harder to escape. Those on low incomes are worst hit, as charges in excess of £30 - even if they've gone overdrawn by just £1.50 - are enough to push them into debt. Part of the problem is that customers aren't given enough information on charges and fees in plain English. We want to see banks present more useful information upfront - such as on bank statements - letting customers know when, how much and why they are being charged, and letting them know they are allowed to switch to a different bank, if necessary. Yet people aren't switching current accounts anywhere near as much as they are switching, for example, energy suppliers, because the market is too uncompetitive and because that information isn't there. Switching has become easier, but far more needs to be done to improve people's confidence in banks. Again, those on low incomes or with little banking experience are the most adversely affected. Angela Knight, British Banking Association It's bizarre that the NCC is complaining about current accounts; doesn't it want people to have a choice? Banks and building societies operate a variety of different accounts for a range of individuals, so there's choice and it's simple. Simple leaflets in plain English explain the different accounts and how they work, and also provide legal details. It's hard to see how the NCC can complain about the information that's available. Of course, although banking is free to those who keep their account in credit, as 85% of customers do, there are fees for unauthorised overdrafts. But, if you do get hit by an overdraft charge, you can ring up your bank and sort it out - banks are there to help customers. Following discussions between banks and the government about financial inclusion, those with low incomes are now offered what's called a basic bank account, which prevents them from going into an unauthorised overdraft. However, all the research shows that it's not necessarily those on low incomes who go overdrawn without notifying their bank, but those who could avoid it. People on low incomes tend to be more careful with their budgets.
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