Paying for cash

First a declaration of self-interest. I’m one of those lucky people who approached a bank about these wretched charges that hit from time to time – someone pays you late so the bank charges you for an unauthorised overdraft. There’s a school of thought that says they’re fining you rather than charging you for a service as the charges don’t reflect their inconvenience, and as they have no authority to charge such a fine the charge is illegal.

My personal bank coughed up immediately, which was nice. My business bank, on the other hand, insists there’s no case to answer so it won’t pay.

Wiser heads than mine are considering the justification or otherwise for these charges at the Office of Fair Trading – I won’t trouble you with the links as the coverage has been so widespread. It’s interesting, however, to consider the longer term ramifications.

The banks, in their off-guard moments when they admit that they might have an issue on their hands, have to get back to the fact that they’re running a business rather than a business support charity. They are there to support their own bottom line rather than to shovel loads of cash back towards their customers, pleasant though that can be when it happens to an individual or business.

In other words, if the OFT says they have to pay up, they’ll do so in the shorter term but will then look at increased bank charges to fund repayments past and present. It’s difficult to see how they could do otherwise.

So, is it wiser to pressure for refunds or not, if it’s going to push charges up? My instinct is that it’s still worth it because you’re probably going to end up paying for it anyway. If the OFT decides the disputed charges should be paid back then the standard charges will increase regardless of whether a particular individual or organisation has claimed them or not. So if there’s a chance you’re affected you might as well claim; the likelihood is that if the OFT rules on the side of the consumer you’ll be charged for it anyway in the longer term.

Which, if you have the sort of business or job that allows for wholly predictable payments inward and have never had to go overdrawn unannounced for even a short while, will be a source of annoyance – and might even provoke a series of counter-claims.

Guy Clapperton is a freelance journalist who specialises in small business issues and has written for the likes of The Guardian, the FT and the Daily Mirror. Guy has written about finance and franchising for SmallBizPod. http://www.guyclapperton.co.uk