Dec/090
Supreme Court Rules in Favour of Bank Charges
A Supreme Court judgement could be disastrous for millions of bank customers. The judgement has overturned earlier rulings that allowed the Office of Fair Trading to look into the fairness of charges for unauthorised overdrafts. Supreme Court president Lord Phillips stated that bank customers agreed to pay overdraft charges as part of the price of having a current account. As a result banks can continue to charge high fees when customers go overdrawn without authority, in order to subsidise the cost of providing accounts to other ‘good’ customers.
Although disappointed with the ruling the OFT has not yet made the decision to stop investigating unfair bank charges. Research undertaken by the OFT, showed that unarranged overdraft charges were “difficult to understand, not transparent and not subject to effective consumer control”. The continuation of investigations into unfair bank charges has also been supported by Gordon Brown. The advice offered by the banks to their customers at this time is to arrange an overdraft plan on opening an account to avoid any charges.
Aug/090
Worst Banks for Overdraft Charges
The ten banks with the worst unauthorised overdraft charges…
This week David Cameron has called for victims of “unfair” bank charges to be compensated “quickly and fairly” while Nick Clegg has agreed to table a motion calling for automatic payouts if bank charges are ruled unacceptable.
As the test case on unauthorised overdraft charges goes on, currently being heard in the House of Lords, consumer organisation Which? investigated the banks to see which ones charge customers who go over their unauthorised overdraft limit the most.
The figures below are based on an unauthorised overdraft of £30 for three days, including charges for a £10 cheque on day one, a £10 direct debit on day two and a £10 standing order on day three that the bank pays. The figures do not include interest.
Rank Bank/ Building Society Unauthorised overdraft charges Annual charges for £500 authorised overdraft *
1 NatWest/ RBS - £118 /£33
2 Alliance & Leicester - £90 / £60
3 Norwich & Peterborough Building Society - £88 / £26
4 Co-operative Bank/Smile - £80 / £54
5 First Direct - £75 / £17
6 Abbey - £70 / £28
7 Lloyds TSB - £42 / £40
8 Nationwide - £41.50 / £40
9 Cahoot - £30 / £21
10 Northern Rock - £28 / £110
* The annual cost of a £500 authorised overdraft for two weeks a month, assuming customers pay in £1,000 a month.
Source: Times Money
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