Banking groups were under renewed attack yesterday after Barclays posted #7billion of an estimated #40billion profits haul in the sector.
Campaigners say the firms are raking in excessive profits while customers suffer “extortionate” charges and poor service standards.
The Consumer Action Group and campaigner Martin Lewis, of moneysavingexpert.com, both said firms were making profits
by levying unfair charges on customers.
The National Consumer Council also accused firms of failing to spend their record earnings on improving customer service.
With the banks reporting season now under way, it is thought that the “big five” alone will report more than #38billion in profits from last year.
Analysts predict HSBC will post the largest profits haul when it unveils its results early next month, forecasting #11.56billion for the group in 2006.
Royal Bank of Scotland – owner of NatWest – is set to follow, with analysts expecting pretax profits of #9.16billion.
The UK’s top five retail banks are predicted to have made more in profit per customer last year than ever before, earning #112.20 per customer, up 11.6 per cent on 2005, according to research from Pitney Bowes Group 1 Software.
Consumer watchdog Which? claims that banks made #4.7billion in profits last year from charging “massive” fees and interest rates on unauthorised overdrafts, even when the amount is small and cleared quickly.
Consumer Action Group co-founder Marc Gander said: “These banks say that they do not make profits from these charges but it’s just not true and they’re taking us all for idiots.”
He added that the group, which has signed up more than 113,000 members since launch a year ago, was shocked at the poor levels of customer service offered by many of banks. He said: “Where do the penalty charges go? Certainly not on customer service.”
Mr Lewis called on customers who believe they have paid unfair bank charges to claim for a refund. He said: “The record profits should show that it’s time to get your cash back.”
More than 850,000 template bank charge complaint letters have been downloaded from the website by consumers in the past three months, according to Mr Lewis. An investigation last year by the Office of Fair Trading found that customers were being charged more than #300million a year in unlawful penalties on credit cards.
The OFT warned that any penalty charge of more than #12 was unfair, leading to a number of High Street banks cutting their fees.
But the British Bankers’ Association hit back at the criticisms levelled at banks over their profits and customer treatment, saying only “a relatively small proportion” of bank profits came from personal banking charges.
BBA spokesman Brian Capon said: “The majority of bank profits come from wholesale and international operations.
“Most people get free banking and all they have to do is to keep in credit.”
Meanwhile, the National Consumer Council urged banks to ensure that “world-class profits came with world-class customer service”.
Chief executive Ed Mayo said: “We want banks with a heart, particularly for customers who are most dependent on them.
"People such as elderly people, those with disabilities and people on a low income. “We know that many of these people using basic bank
accounts feel intimidated and unwanted.”
