Answering bank charges skeptics: pls help....

MarkyMarkD

I'm sure this is all very relevant to Martin's original question. But then again, perhaps not.

I am not going to answer comments relating to things I didn't say.

I didn't suggest that the OFT's study was less comprehensive than anything I've said. Only an idiot would infer that from what I've said.

I did suggest that the OFT's market study was relevant in 2006 and that it is less relevant now. Only an idiot would suggest that Net Interest Income outstrips funds charges in today's interest rate environment.

Interest rates have not changed in 6 months and many expect them not to change for at least another 6 months and possibly remain lower than their historically average levels for quite some time after that. Obviously that makes a difference to the conclusions of the OFT market study.

In any case, SO BLINKING WHAT?

It is completely irrelevant to the whole discussion whether banks make money out of net interest income or not. They disclose 100% honestly and completely how much interest they pay to their customers. That is all that matters to the customers - not how much the banks make by using those funds.

The point is that current accounts are very expensive for banks to operate, and those costs are covered by net interest income and fees. And without fees they would not arguably make money at all.

natweststaffmember

[QUOTE=MarkyMarkD;25068753}


The point is that current accounts are very expensive for banks to operate, and those costs are covered by net interest income and fees. And without fees they would not arguably make money at all.[/QUOTE]

Mark, can I ask the obvious question now, in light of the RBS Group decision to lower charges and the likelihood a few others will follow(albeit Barclays did that already.
If they are very expensive to run, why are the charges themselves going down and not remaining the same? Are people using less expensive methods to run their accounts now than 6 months ago?
Or in the case of RBS Group, is it now for Business banking customers to subsidise the whole of the personal current account market since they are excluded from this change?

Nathan_Spleen

MarkyMarkD wrote: »

It is completely irrelevant to the whole discussion whether banks make money out of net interest income or not. They disclose 100% honestly and completely how much interest they pay to their customers. That is all that matters to the customers - not how much the banks make by using those funds..

What matters to customers is the cost (to them) of the banking services they use. And unlike any other consumer essential, the cost of banking is remarkably obscure.

It would be good to revisit this when the OFT announce their reccomendations and remedies in the next few weeks. My money's on a reference to the competition commision. Where's yours?