Banks will end extortionate overdraft charges for going just a few pence into the red
November 21, 2011 by admin
Filed under Overdrawn Fees Articles
- There are also plans to warn customers when they approach debt-zone
- Includes right to switch current account to new bank in seven days
- But scheme will not come into force until 2013 and will rely on voluntary measures
By
Sean Poulter
Last updated at 3:24 AM on 22nd November 2011
No more nasty shocks: Banks will send warnings to customers who look like they are close to going overdrawn
Banks are to stop charging customers up to £25 for going a few pence overdrawn – but not until 2013.
There are also plans to start sending warning emails or texts to those whose accounts look like going into the red.
Other measures include the right to switch a current account to a new bank within seven days.
The changes come more than a decade after the Daily Mail and Money Mail started highlighting the scandal of unfair overdraft charges.
Details of the new deal were revealed by the Financial Secretary to the Treasury, Mark Hoban, and Consumer Affairs Minister Edward Davey.
However consumer groups are concerned that its success relies on trusting an industry which has a record of failing customers.
Mr Hoban said: ‘The public told us they felt overdraft charges were unclear, and that it was unfair to be penalised for only going over your limit by a few pounds.
The changes made as part of this review will empower consumers to make the right decisions for them and encourage responsible lending practices.’
Ministers defended the decision to rely on voluntary measures, claiming it would deliver a quicker remedy than trying to change the law.
Announcement: Consumer Affairs minister Edward Davey (left) and Financial Secretary to the Treasury Mark Hoban MP revealed details of the new deal
However, the current account balance
alerts will not be available until March 2012, while the other measures
will not be fully implemented until September 2013.
The
official customer body, Consumer Focus, said it was concerned about the
delay and the fact that the Government is relying on voluntary action
from the big banks.
Its chief executive, Mike O’Connor,
said: ‘It is disappointing that these measures are voluntary and that
there are no plans to legislate to protect consumers from the effects of
unfair bank charges. This is tinkering around the edges when substantive reforms are needed.’
Research by the consumer group Which?
has identified scenarios in the past where a £50 overdraft could
generate penalty charges of £165.
Today, people might be charged £25 per month for an unauthorised overdraft and an interest rate of up to 29.99per cent.
Which? executive director, Richard Lloyd, said the public do not trust banks.
‘Customers will need to be persuaded
that any voluntary agreement to improve overdraft charges will actually
deliver the promised benefits,’ he said.
Pugh’s view of the bank charges shake-up
‘It’s right that some banks do what
they can to stop people going overdrawn, and text and email alerts will
certainly help, but banks should treat people fairly and not charge for
these services.’
Customers will still be allowed to go
a few pounds into the red without being hit with a charge, but to date,
no figure has been put on this ‘wiggle room’.
The move to speed up the ability to
switch a current account is designed to increase competition in a market
where, currently, adults are more likely to get divorced than change
their bank.
The British Bankers’ Association insisted the proposals amount to ‘sweeping improvements’.
Its chief executive, Angela Knight,
said: ‘Customers will, more easily, be able to exercise greater control
over their current account to enable them to take action to, where
possible, avoid incurring unarranged overdraft charges.’
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Amazing how the banks can introduce new rates and charges instantly, but can only ever ‘phase-in’ reductions over several years. A bit like petrol prices really…
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I can understand the large charges if it was the time before computers so man power was used to keep accounts up to date but now a computer programme adds the charge and sends out the letter (if there is one). I have been caught with charges and was told over the counter what i had to have in the account to cover the charges. The next month i was hit with massive charges again because the person at the counter had somehow got it wrong. How can the headline say the banks have been ordered when it voluntary?
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Walk into a bank and demand money and its called robbery and you’ll get 10 years, Banks steal your money and its called business.
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I am in a fairly remote part of China,without any HSBC banks.HSBC said they would update their security system at the end of 2011,Mine has been updated now,and I can no longer access my account on the internet.From time to time,the government along with my private pension is stopped until I can send proof of life.I have no idea if this has happened yet,as I cannot get access on the internet.No doubt should this happen.the bank would be there like demented ferrets with their bank charges.Which I would say was caused by them.which they would ignore.No one speaks English,mail takes 6 weeks,and faxes are something out of science fiction.The bank has now gone the way of the HMRC,no email addresses,only phone calls and faxes,they like the HMRC, can now say what letter,we did not recieve any letter.
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I am in a fairly remote part of China,without any HSBC banks.HSBC said they would update their security system at the end of 2011,Mine has been updated now,and I can no longer access my account on the internet.From time to time,the government along with my private pension is stopped until I can send proof of life.I have no idea if this has happened yet,as I cannot get access on the internet.No doubt should this happen.the bank would be there like demented ferrets with their bank charges.Which I would say was caused by them.which they would ignore.No one speaks English,mail takes 6 weeks,and faxes are something out of science fiction.The bank has now gone the way of the HMRC,no email addresses,only phone calls and faxes,they like the HMRC, can now say what letter,we did not recieve any letter.
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Banks ordered to halt unfair overdraft charges…But scheme will not come into force until 2013 and will rely on voluntary measures————————- Brings to mind Abba’s song “I have a dream….”
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