Bank charges up a fifth

According to Defaqto, the average penalty for bounced cheques, unpaid standing orders or direct debits and other debts is now over £30 compared to around £27 in August 2003.

David Black, Defaqto’s head of banking and author of the report, warned that this could ‘e an indicator of higher charges yet to come: “Future development will see many providers move to a charging structure that involves a compulsory account maintenance fee and which also penalises heavy usage.”

Findings of an increase in fees come as banks record massive levels of bad debt amongst customers and so seek ways to recoup losses.

Mr Black added that with bank accounts being provided freely, the running costs are being subsidised by those who go into debt and incur charges, typically poorer customers.

He also warned that different banks had widely varying fee levels for certain actions and many are paying the price of this.