To ask Her Majesty's Government what proposals they have to require banks to reduce the charges they impose on retail customers; and what action they are taking to monitor such charges.
The Government committed in the coalition agreement to introducing stronger consumer protections, including measures to end unfair bank and financial transaction charges. The Government are putting this into action through the joint Department for Business, Innovation and Skills and HM Treasury consumer credit and personal insolvency review. In July 2011, the Government published a summary of responses to the call for evidence to the review.
The call for evidence found that there have been significant developments in the market in recent years. As part of the Office of Fair Trading's work, banks have committed to introduce measures to improve the transparency of unarranged overdraft charges and many have also revised their charging structures in the past two years. This has already led to some reductions-the average unpaid item charge has fallen by more than half from £35 in 2007 to £14 in 2010. However, responses to the call for evidence showed that there are still serious concerns about how charges-including the new charging structures-affect consumers, particularly where charges may be not be clear or transparent enough.
The Government are working with the industry to determine the most appropriate course of action. We will, however, regulate to address consumer detriment if suitable alternatives cannot be agreed.
The Government will make an announcement on this later this year.