November 23, 2009

The end of free banking could be nigh, as the banking industry awaits a ruling this week on overdraft charges that could result in pay-outs of hundreds of millions to customers.Banks could seek to recoup the costs, and replace fee revenues, said industry commentators, by imposing charges on current account transactions and reintroducing fees for ATM withdrawals.“If there’s a big hole in their profits they’ll be looking at alternatives. The cost of banking will have to be spread across a wider audience,” said Kevin Mountford, head of banking at moneysupermarket.

Two-tiered systems, where customers holding multiple products with a bank pay lower or no fees, could also become common. Santander took the first step in this direction last week when it launched a fee-free current account for customers who also held a mortgage with the bank.Scores of senior barristers and members of the public will cram into the new Supreme Court on Wednesday to hear its most significant ruling so far.An estimated 1m claims from bank customers are currently frozen and awaiting the outcome of a legal battle between the Office of Fair Trading and eight high street lenders which started two years ago.

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