James Daley: The real cost of fees crackdown

If, like me, you don't open your bank statements, it's time to start. Last week, the Office of Fair Trading warned UK banks that it is planning to crack down on the charges they hit customers with for going overdrawn or bouncing a cheque. This sounds like great news, but with each new set of price regulations, the banks just get ever more cunning.

I don't wish to be a defender of the big, bad banks (HSBC made profits of more than £11bn last year, which must be verging on the excessive), but I've never had too much of a problem with bank charges. The way I see it, there are some simple rules to follow, and if you stick to them, you'll never get charged. Current accounts, debit cards, cheque books, direct debits and standing orders all cost us nothing, but are surely not without cost for banks. They get to invest the balances in our accounts on a short-term basis and pay us peanuts, but I'm OK with that, too. It's clear to me that one of the ways banks can afford to keep their services free is by landing customers with a nasty fee if they step outside of the terms of their agreement. Even then, most banks will let you off the first time if you ask them nicely (or threaten to take your business elsewhere).

If I bust my overdraft limit, why shouldn't I get hit with a £25 charge? The fee may not relate to the cost that my bank incurs, but then the charge I pay for my current -account services (nothing) doesn't relate to the cost involved either.

My concern about the OFT's crackdown on charges is that it will only get harder to know where you stand. Banks will still make money, they'll just take it in a more underhand fashion. This is the case with credit-card companies, who have been pressurised into reducing their late payment fees to £12.

Providers have been clawing back the lost revenue where they can. HSBC scrapped its policy of allowing customers to pay off the highest-interest-bearing debt on their cards first. So if you spend £100 on your card one day and £200 a month later, you won't stop paying interest on that first £100 until you've cleared the whole balance. I'd rather it had left its charges at £20 for a late payment and kept this consumer-friendly policy.

Who knows where banks will claw back profits from the OFT's crackdown on overdraft fees? I never open my bank letters - I do all my banking online. But I'm about to start. The changes will all be there, hidden in the small print. You've been warned.

n n n What century is Scottish Widows living in? This week, it launched yet another advertising campaign starring... wait for it: a Scottish widow.

I've lost count of how many years it's been using this same tired image. OK, so the widows have got a bit sexier over the years, but what sort of message do they think they are sending out to would-be customers, especially younger ones, who are turned off by saving? Good-looking women might sell cars, but they don't sell savings products. And good-looking women who were recently bereaved? It's all wrong.

For me, Widows' campaigns do nothing but reinforce the out-of-touch stereotype of the insurance industry. Scottish Widows is a powerful and long-standing brand that has been withering ever since Lloyds TSB bought it six years ago. In the intervening time, my strongest memory of the company is still the launch of a dodgy precipice bond that it missold to thousands of investors, before being fined millions of pounds by the regulator. It has certainly made more than its fair contribution towards giving the financial-services industry a bad name.

Rumour has it that the company is up for sale. Let's hope it's sold, and someone finally has the courage to bring the business into the 21st century.

j.daley@independent.co.uk

David Prosser is away