The Supreme Court will rule whether bank charges, imposed on millions of current account customers, are unfair.
If the court decides they are, experts predicted banks stand to lose up to £10 billion while customers are likely to see charges imposed on a range of banking services which they have traditionally enjoyed for free.
We don\’t actually see that retail banking is a super profitable industry. There\’s no particular signs of excess returns to capital. So any set of fees being charged in one place, if we try to abolish them, are likely to pop up in other areas as another set of fees.
If the banks have been making a few billion a year in revenue from those with unauthorised overdrafts then it won\’t be a terrible surprise that if they don\’t get that revenue then they\’ll stop doing the cross subsidies which they used that revenue for.
Another way of putting it, if the retail banking market was indeed competitive then those revenues would be competed away: what they gouge out of those with chaotic finances turns up as a subsidy for those with unchaotic ones. Remove that revenue doing the subsidising and and the subsidy will go.
We can even run this the other way around. If the banning of such overdraft charges leads to the extinction of the free current account then we can say, with some confidence (not perfect, but some) that retail banking is indeed competitive.
Update: the banks won.
Britain\’s Supreme Court has ruled in favour of the High Street banks in a row over overdraft charges, delivering a blow for thousands who had hoped to recoup cash.