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21/11/2011
Overdraft Charges For Small Amounts To Go
The Government is proposing a number of changes for banking customers, including stopping banks from issuing charges when you go only a few pounds overdrawn.
The proposal, issued by the Department of Business and Skills was a response to consumer concerns about the lack of control and transparency over bank charges. The Government said it was driving forward a voluntary agreement, which will apply to all full-facility current accounts offered by the major banks.
Under the new agreement, the Government claims, over 85% of personal current account customers will benefit as they make "unarranged overdrafts" clearer, fairer and more manageable.
This includes annual statements so that customers can see how much their account costs over the year.
Banking customers will have the option to receive alerts when their balance is low so that they can take action to avoid a charge; and they will no longer be charged for going over their limit by a small amount.
Balance alerts will be available from March 2012, with full implementation of the other measures by March 2013 at the latest.
Consumer Minister Edward Davey said: "The package of measures we have set out will encourage consumers to make better credit decisions and strengthen protection where necessary - particularly for the most vulnerable.
“We are committed to responsible lending and will continue working with the industry to improve consumer protections, particularly in the high cost credit market, where we are speaking to the industry to ensure that additional consumer protections are included in codes of practice."
Financial Secretary to the Treasury Mark Hoban said the public felt overdraft charges were unclear, and that it was unfair to be penalised for only going over your limit by a few pounds. He also said the proposals would tackle Store Credit cards and their discounts.
“We’ve listened to these concerns and have worked with industry to develop a strong package of measures in response. The changes made as part of this review will empower consumers to make the right decisions for them and encourage responsible lending practices,” Mr Hoban said.
Additionally, from September 2013, a new guaranteed switching service within seven days will give customers the ability to switch accounts quicker to improve competitiveness.
(DW)
The proposal, issued by the Department of Business and Skills was a response to consumer concerns about the lack of control and transparency over bank charges. The Government said it was driving forward a voluntary agreement, which will apply to all full-facility current accounts offered by the major banks.
Under the new agreement, the Government claims, over 85% of personal current account customers will benefit as they make "unarranged overdrafts" clearer, fairer and more manageable.
This includes annual statements so that customers can see how much their account costs over the year.
Banking customers will have the option to receive alerts when their balance is low so that they can take action to avoid a charge; and they will no longer be charged for going over their limit by a small amount.
Balance alerts will be available from March 2012, with full implementation of the other measures by March 2013 at the latest.
Consumer Minister Edward Davey said: "The package of measures we have set out will encourage consumers to make better credit decisions and strengthen protection where necessary - particularly for the most vulnerable.
“We are committed to responsible lending and will continue working with the industry to improve consumer protections, particularly in the high cost credit market, where we are speaking to the industry to ensure that additional consumer protections are included in codes of practice."
Financial Secretary to the Treasury Mark Hoban said the public felt overdraft charges were unclear, and that it was unfair to be penalised for only going over your limit by a few pounds. He also said the proposals would tackle Store Credit cards and their discounts.
“We’ve listened to these concerns and have worked with industry to develop a strong package of measures in response. The changes made as part of this review will empower consumers to make the right decisions for them and encourage responsible lending practices,” Mr Hoban said.
Additionally, from September 2013, a new guaranteed switching service within seven days will give customers the ability to switch accounts quicker to improve competitiveness.
(DW)
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