Bank Charges Test Case

Laura has asked me this question:

What do you think the outcome of the test case involving bank charges will be? How will it effect both the banks and their customers?

I think the banks will lose in the end and my personal prediction is that this will signal the end of free banking in the UK.

You may recall that until the mid 1980s, you had to pay bank charges for a personal current account in the UK. Midland Bank stopped this practice and the rest of the industry followed suit. The ramification of that decision was that banks were unable to make decent returns on their retail banking operations and that led to a much greater focus on sales (e.g. being offered products every time you pay money in over the counter) and an increase in penalty fees of the kind which are now under attack.

I think once the banks lose this case, it will only be a matter of time before the UK consumer joins much of the rest of the world in paying for current account services.