Myth Of Free Banking 'Shattered' As Banks Criticised For Excessive Charges In New Which? Report

'It's A Disgrace' - Which? Slams Banks For Blaming Libor Scandal On Free Banking

Any attempt to state the Libor rate rigging crisis was a result of 'free banking' is a disgrace and a slap in the face, according to consumer champion Which? .

Which? chief executive Peter Vicary-Smith rejected calls from several banks to charge for current accounts, adding the suggestion that banks should increase charges to avoid more scandals "defies logic and is a slap in the face for consumers".

"It's a disgrace that the very people who bailed out the banks are being asked to pay more for the most basic accounts, while the industry continues to be rocked by scandals like payment protection insurance (PPI) mis-selling, Libor rate-rigging and IT failures," he added.

Vicary-Smith's comments arrive on the back of research by Which? that showed some customers could be charged as much as £900 a year for supposedly free accounts.

It's been known for some time that 'free' accounts are not actually free of charge; consumers are charged for going into their overdrafts - even if they're previously agreed with their bank - withdrawing cash while abroad and suffer from low interest rates on savings.

But the issue raised its head again last week after Sir David Walker, the new chairman for Barclays, told the Sunday Telegraph that 'free' banking had driven banks "inexorably" into scandals such as PPI mis-selling and rate rigging.

In addition, there were suggestions in the media over the weekend that a number of banks were looking to use the current parliamentary inquiry into banking to push for paid-for current accounts to become the norm.

Banks have been feeling the pressure since the government decided to separate the retail high street banks from their investment arms - a measure which is currently being implemented and has a deadline of 2019. It is widely believed however, that market forces will lead banks to put the new structure in place within the next two years.

Which?'s report has come under attack from the British Bankers' Association, which told the Press Association the research was "disingenuous".

Charges can be avoided altogether by not going overdrawn, the BBA insisted, adding most customers still enjoy free banking.

"All banks publish a clear tariff of charges on their websites and provide customers with an annual summary of the transactions passing through their account including a breakdown of any interest and other charges," the BBA continued.

"If a customer wants to switch to another bank it's easy to do so and the industry is working towards making the process even easier."

Reaction on social networks to the news was mixed - many were supportive of the Which? report and its findings and called for greater transparency from the banks.

But there was criticism on Twitter from Roger Helmer MEP, who said Which?'s call was "counter-productive".

Many tweets also backed the BBA's stance, saying more focus should have been given to the fact that if you are a good customer and don't go overdrawn, and don't use credit or debit cards abroad you won't be charged.

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