Barclays cuts fees as banks battle for accounts

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Barclays cuts fees as banks battle for accounts

29/05/2008 23:41

LONDON (Reuters) - Barclays slashed its overdraft charges by up to three-quarters on Thursday, as banks battle to attract current account customers and review their fees in the light of a bruising court battle.

The banking giant will reduce charges for customers who go overdrawn beyond an agreed limit to 8 pounds from up to 35 pounds at present -- though it will also hike the interest charged on overdrawn balances by more than 2 percent.

Under pressure to find alternative sources of funding after the credit crunch hit wholesale markets, banks have stepped up the battle for customer accounts.

Thursday’s shake-up also comes as eight financial institutions, including Barclays, fight high-profile test case in the courts over current account charges, which consumer campaigners say are unfair.

A spokeswoman for Barclays said the changes were completely unrelated to the case, and came on the back of two years-worth of customer feedback.

Six weeks ago the High Court ruled in favour of the Office of Fair Trading, allowing the consumer affairs watchdog to press ahead with an investigation into whether banks can legally charge customers default fees.

These typically range from 24 to 39 pounds for each transaction over and above an authorised overdraft.

That ruling potentially paved the way for current account holders to reclaim billions of pounds in fees, but Justice Andrew Smith said last week he would allow the banks to appeal.

(Reporting by Jennifer Hill; Editing by David Cowell)

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