Cut in overdraft fees a 'victory for consumers'

08/09/2009

Which? has hailed the decision by the Royal Bank of Scotland (RBS) and NatWest to slash penalty charges for unauthorised overdrafts as a victory for consumer pressure and has called on the banks to repay millions of pounds "unfairly" taken from customers' accounts.

RBS and NatWest have confirmed that from October 1st, the charge for slipping into the red without permission will be halved to £15.

The fee for having a cheque bounce will also be cut from £38 to £5.

The move comes ahead of a decision by the UK's new supreme court on whether the Office of Fair Trading should regulate unauthorised overdrafts, which currently bring in around £2 billion a year for the banking industry, the BBC reports.

Which? chief executive Peter Vicary-Smith said the latest "victory" for consumers shows that banks should "admit defeat" over the charges and refund millions of pounds in fees taken from customers over the years.

EuroDebt director Kevin Still commented: "EuroDebt has to routinely make allowances for large bank charges in a client’s household budget where they want to stay with their existing bank.

"Monthly charges over £38 are quite normal, often considerably more where people are struggling to meet contractual payments on credit agreements and essential household expenditure.

"This is one of the reasons we introduced our prepaid current account, which is available to all UK residents and isn't subject to a credit check. There is one low flat monthly fee of £12.50 and no charges for returned direct debits or standing orders.

"Disposable income is swept from the current account onto a payment card that can be used on the high street, over the internet or over the phone to make payments or to pay bills.

"We feel strongly that social exclusion can be a major problem for people struggling with debts and the account is eligible to people on Debt Management Plans, an IVA or even bankruptcy.

"As this is Financial Planning Week, we think this a great first step to regaining control of your finances. We recommend that people use the EuroDebt Debt Calculator to assess their Financial Health and go to www.bankswitching.co.uk to determine whether making a change or having a contingency plan is in your best interests."

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle,

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