Report cites inconsistencies in overdraft charges
Price comparison website Moneysupermarket.com has released a new study which looks at the differences between the charges various UK banks levy for an unauthorized overdraft. The report concludes that the charges are inconsistent and “unjust”. Among the findings is that depending on which bank a customer uses, the charge for an overdraft of £60 can range from £25 to £133.
The lowest charge found for an overdraft of that amount was found at HSBC (LSE: HSBA; NYSE: HSBC; Euronext: HSBC; SEHK: 005), while the highest was at NatWest, part of the Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM). The difference was £108. In the middle, Nationwide Building Society charged £84.50, while Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642) and Lloyds TSB (LSE: LLOY) each levied a charge of £90. Halifax, part of HBOS (LSE: HBOS) and Alliance & Leicester (LSE: AL) charged £118 and £125 respectively. Moneysupermarket’s head of savings wondered how those differences can be justified.
The new report comes at a time when the Office of Fair Trading is conducing a wide-ranging investigation of bank charges in the UK and as thousands of customers who have had overdraft charges levied against them are bringing suit against their banks to recover overdraft charges that they consider too high. The British Bankers’ Association has defended the charges by saying that all customers have to do to avoid them is to make sure that they do not overdraw their accounts. Meanwhile, some banking sector officials have implied that if the government caps overdraft fees, they might be inclined to begin charging for services that are now free or else levy regular monthly fees on all accounts.