Banks panic at loss of profits

The news that First Direct Bank (who are part of the HSBC Group) are going to start charging their customers £10 a month for banking means that the others, no doubt, will eventually follow suit.

According to the Telegraph newspaper today, from February 2007, First Direct customers with an average balance of less than £1500 and with only one account with them will face the charge.

One of the reasons cited for this and in my opinion, completely unethical price introduction, is due to the OFT investigating the payment protection insurance (PPI) market.

PPI is a private insurance policy that provides a financial safety net in case the policyholder becomes unable to work due to accident, sickness or redundancy. It provides regular income to help cover monthly commitments.

PPI is a big, fat earner for high street banks, with them charging up to ten times more than independent providers. With OFT now looking at the PPI market closely, the general consensus is that greedy banks and lenders will be forced to cut their prices and smarten up their sloppy sales practices.

So, by putting a cap on the payment protection insurance market it will of course mean a reduction in profits for the banks – hence the introduction of charges just for the pleasure of having a bank account.

Certainly, the PPI market has seen a deluge of complaints for mis-sold policies. The Citizens Advice charity says that PPI is often very expensive and impossible to claim on.

This is all down to the banks hard-selling their over-priced, difficult to understand PPI policies.

However, there are still inexpensive good value and transparent PPI policies available. If you are looking for PPI, specialist provider BritishInsurance.com offers a low cost,high quality products.

And if you are looking for a bank account that won’t charge you for the pleasure of having an account with then, I’d suggest putting your money under the mattress!