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16:00 - 08-May-2008
An estimated 7m people who bank with Lloyds TSB, NatWest and Royal Bank of Scotland have been told their monthly account fees will go up.
They all use increasingly popular 'packaged accounts' which offer extra services such as holiday insurance and credit card security plans on top of the basic current account.
The high street banks are encouraging customers to move to these fee-paying accounts and away from traditional 'free banking'.
About 2m Lloyds TSB customers with Gold and Platinum accounts saw monthly fees rise by £2 to £12 and £17 respectively on 1 May. The bank is the market leader in packaged accounts.
RBS and NatWest, which are part of the same group, are increasing charges by 95p on the Royalties and Advantage accounts. NatWest put its charges up on 5 May, and RBS is to introduce the new fees from 31 May. NatWest customers with an Advantage Private account will see its monthly fee rise by £1.40 to £19.95.
The three banks and the other major high street names are considering whether to appeal against a High Court decision last month that could pave the way for a cap on unauthorized overdraft charges.
The court agreed with the Office of Fair Trading that the widely-resented charges are subject to laws that determine whether such fees are fair or not.
The OFT, which is investigating overdraft charges, is now expected to bring another High Court case that could make high charges of up to £39 a day illegal.
After a similar investigation of credit card charges a £12 cap on fees was introduced. Some figures in the industry believe such a cap would make free banking for all uneconomic.
David Black of Defaqto, the financial analyst, said: 'The current account market is going through a lot of changes as a result of the OFT court case.
'If the conclusion is that these charges are too high, the OFT could seek to force banks to reduce them. If that's the case, banks have to look for other ways of making money.'
The three banks have defended the increased fees, claiming they reflect an increased range of benefits. They also said that customers cannot be forced to open the accounts. The Banking Code prohibits banks from transferring customers from free accounts to fee-paying accounts without their permission.
A Lloyds TSB official said: 'Customers told us they would value additional benefits, and to cover the cost of these we have increased the cost of the Gold and Platinum accounts.'
A NatWest official added: 'The packaged accounts offer our best-ever potential savings for customers with the addition of new features, and this has been reflected in modest price rises.'
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