Which? calls for action on overdraft charges

Which? calls for action on overdraft charges

Consumer group Which? is calling for unfair overdraft charges to be stopped after finding that charges are too complicated and impossible to compare.

Which? asked a number of volunteers to calculate how much an unauthorised overdraft would cost at RBS-NatWest, HSBC/First Direct, Lloyds, Barclays, Halifax, Nationwide and Santander.

The volunteers, who included a maths PHD student, were only able to calculate seven out of 48 charges correctly.

The study found that there is a wide discrepancy between the overdraft charges levied by different banks.

First Direct and HSBC charged the highest unauthorised overdraft fee – at £150 a month, while Barclays would charge just £66.

However all of the charges were so complex that it would be impossible for most people to work out the best deal.

Which? also criticised banks for charging high daily fees which can equate to an APR of over 2,000 per cent.

The consumer group is calling on the Government to give the new financial regulator, the Financial Conduct Authority (FCA), sufficient power to stop banks levying excessive and complex fees.

The FCA, which will take on responsibility for enforcement and conduct from the Financial Services Authority, is expected to have the power to oversee the design of financial products.

Peter Vicary-Smith, Which? chief executive, said: “The regulator must be a strong, open and proactive watchdog that stands up to the banks, not a lapdog”.

In related news, Virgin seems to have backtracked on its plan to charge for all its current accounts.

The move would have meant customers currently using free-if-in-credit accounts having to start paying around £60 a year in fees.

The plan was revealed by Virgin Money’s chief executive Jayne-Anne Gadhia in an interview with the Daily Mail, but Sir Richard Branson, chairman of the Virgin Group, has now commented that it would be “very unwise” to stop offering free current accounts.

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