Banks ripping off customers, says Cable

Business Secretary lambasts banks for lack of clarity on overdraft charges

By Stephen Hunt, 20th July 2010

Britain's banks are ripping off their customers, said Business Secretary Vince Cable in a TV programme broadcast on Monday evening.

On the Panorama programme, Cable vented his spleen over the insidious charges that banks levy on customers going into overdraft.

Research by Panorama has uncovered interest rates of up to a humungous 167% being slapped on those in unauthorised overdraft, while banks are charging as much as 32% interest on authorised overdrafts despite advertised rates of only 19%.

Cable commented: "Consumers have been ripped off, get a very bad deal, are affected very much by the complexity of a lot of financial transactions that are not transparent."

With regard to government plans to make bank charges fairer, he said: "When we talk about restructuring the banks, what's going to come out of this is a more competitive system where the customers are not ripped off."

He believes the situation has arisen due to an effective cartel operated by the country's banking heavyweights.

"One of the negative side effects of this crisis is that our banking system that was already very concentrated is now even more concentrated so there's less competition, less choice and bigger temptation for banks to earn margins at the expense of their customers," he said.

Customers were urged to inspect the terms of their accounts more closely by Christine Ross, head of financial planning at SG Hambro, the private banking arm of French bank Societé General, which examined overdraft costs for the program.

"What we found is that unless individuals really scrutinise the small print, the overdraft rates charged are far higher than they could even imagine," she said.

For more information on unfair bank charges, see our guides to mis-sold PPI and unfair credit card charges.

Claims Financial