Freelance community affected by bank charges

They also discovered that loans to businesses dropped by 20% in January compared to the corresponding period last year, even though the banks claim they are still lending.

The probe found that the not only have the banks dramatically increased day-to-day and monthly charges for business accounts, they have also hiked up one off loan arrangement fees and raised loan repayment rates. Additionally, the acceptance rate for loans has decreased by 10%.

Some of the increases might appear small, but to a business already struggling to shake off the effect of the recession, they could spell disaster. For example, RBS, Natwest, Lloyds TSB and HSBC have all increased the charge for paying in cheques and cash and withdrawing cash, by up to 3p each.

Lloyds have increased their monthly account fees from £3 to £5, whilst Barclays, which charges quarterly, now charges £16.50, a rise of £7.50.

Meanwhile, the OFT is calling on banks to make overdraft facilities optional, a move they say could save customers from bank charges that run into hundreds of pounds.

Banks charge large fees for unauthorised overdrafts but the OFT scheme would mean this would no longer happen as the bank would have to refuse any transaction that was going to put a customer into the red.

The Office of Fair Trading also wants banks to rethink their bank charges by making them less severe.

Consumer Focus wants government legislation to make overdraft facilities opt-in as opposed to opt-out, saying that consumers will still be left vulnerable if it is left up to the banks to fix the current problems relating to charges.

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Image: Yotsuba & Danbo Rob a Bank by Steve Keys