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Western EuropeApril 1 2007

‘Fair’ penalties could threaten free banking

If British banks are forced to cut the penalties they charge on current accounts, there is a danger that they will make up the shortfall elsewhere, writes Michael Imeson.
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What is it?

Penalty fees levied by British banks on their personal customers for unauthorised overdrafts and unpaid direct debits and standing orders could be capped by the competition authorities. If so, it will cost the industry hundreds of millions of pounds a year.The penalty for an unauthorised overdraft on a current account is typically £25 to £40. It could be cut to £12.

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