Banks in court over charges to customers

British banks have been placed under the microscope over the fairness of charges to customers who go over their authorized overdraft limits. Tens of thousands of customer complaints about how high these charges are has led Britain’s competition watchdog, the Office of Fair Trading (OFT), to launch a court case against the banks. The OFT has been investigating charges for unauthorized overdrafts since March to determine whether or not they are unfair. It believes the charges are too high relative to the costs to the banks. This is being greatly disputed by eight of Britain’s leading banks, who have agreed to a test case to settle the issue once and for all in court. They say there are many costs involved when a customer goes overdrawn without first getting permission to go in the red.

Banks currently fine customers as much as $80 for a single bounced cheque. Industry analysts believe the actual cost to the bank for these bounced payments could be as little as $4 – especially as the process is computerized and rarely involves human decision-making. Overdraft penalties boost the revenue of Britain’s banks by around $3.5 billion a year. If the courts rule against the banks, they could be forced to repay more than $20 billion of penalty charges dating back over six years. Banks might also be prevented from making false or misleading statements to customers. It is claimed that some banks lie to deter account holders from reclaiming unauthorized overdraft charges. A consumer organization called on the public to switch banks: “Vote with your feet and show the banks who is boss,” it said.

1. FINANCIAL SERVICES: In pairs / groups, talk about your thoughts on these financial services. Rank them in order of which you think are best.

banks credit card companies loan companies insurance companies

investment companies stock markets investment bankers other ___________________

2. BANK HEADLINES: Talk about these headlines with your partner(s). What are the stories behind them? Could they come true? Would you like them to come true? 

• Banks to start charging $50 a month to have an account
• Banks guarantee five percent return on all accounts
• The last bank branch closes – all online from now
• More cashiers - No more waiting in banks
• Bank charges declared illegal
• Banks must return all charges made over the past six years
• Personalized banking - Banks return to making home visits
• All banks taken over by governments

3. SYNONYM MATCH: Match the following synonyms from the article:

1.	authorized	a.	inspector
2	watchdog	b.	discourage
3.	determine	c.	overdrawn
4.	once and for all	d.	penalty
5.	in the red	e.	incorrect
6.	fine	f.	automated
7.	computerized	g.	finally
8.	boost	h.	decide
9.	false	i.	approved
10.	deter	j.	strengthen

4.DISCUSSION

STUDENT A’s QUESTIONS 

1. Do you like your bank?
2. What good or bad experiences do you have with banks?
3. What aspect about your bank would you like to change?
4. How would you describe the service you receive from your bank?
5. What adjectives would you use to describe banks / your bank?
6. Do you think bank charges are too high?
7. Do you think bank charges reflect the costs incurred by the banks?
8. Who do you hope wins the court case (and why)?
9. Have you ever gone into the red?

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STUDENT B’s QUESTIONS 

1. Have you ever written a cheque that bounced?
2. What do you think of banks charging $80 fines for things that cost them $4?
3. Do you think banks use charges to boost their profits?
4. How do you think banks will feel if they lose the court case and have to repay billions of dollars of charges?
5. Do you think people should question and challenge the claims made in adverts more often?
6. What do you think of the claims that banks lie to and mislead customers about bank charges?
7. Have you ever voted with your feet?
8. What questions would you like to ask banking executives?
9. Did you like this discussion?