My politics is based massively around my ideas fairness, and it is on this crucial test that I think the bank charges fall down, and fall down in a big way.
Firstly the problem as I see it is the value of the charges is so often out of all proportion to the nature of the “offence”. Put simply the punishment does not fit the crime.
Where people go over their overdraft limit by a matter of pence they are charged often disproportionate fee’s. 10, 20 even sometimes as much a 35 pounds. And whilst the practice is mostly ceased now you are still sometimes also charged for the letter that is sent out. I remember once, when I was younger and frankly poorer being charged in total £50 for having been 67 pence over drawn.
This can lead to people then struggling to make ands meet the following month and often going over drawn again by less than the amount of the charges levied on them the previous week.
But I think the biggest failure of the bank charges regime is the was it disproportionately effects the poorest and most vulnerable in our society. The reality is those who have larger and more comfortable family incomes, those who don’t have most months to go searching behind the back of the sofa for change to buy milk and break, are unlikely to ever get these charges.
Further they tend, in the main, to have free retail banking, subsidised in part, by punitative charges levied on those much poorer. This to me as lefty concerned with fairness, is totally outrageous.
I think a much better system would be one where everyone paid the fair share of their running costs of their retail bank accounts, and that charges should be levied much more closely in proportion to the actual losses suffered by the bank. We all no that an automatically generated letter over a direct debit refusal costs a bank pence not tens of pounds.
And whilst banks need to challenge poor financial behaviour in customers who do not use the services correctly they should not be based on making profits.
Many of the ways in which banking system operate contribute to this happening anyhow, what is the rational logic for some card based transaction to take 3 working days to clear? If the electronic transactions were near instantaneous then it wouldn’t be possible for most bank customers to go over their overdraft limit in error. This happens for customer with Electron or Solo cards and the banks could, if they wanted, make this happen for all.
The status quo is unfair, unreasonable and regressive in nature, and people are right to question why the banking sector in retail banking in the UK should continue to operate in these ways after the taxpayer has bailed them out.