Good news for the financially challeneged

[The Fish 10648]

http://www.which.net/campaigns/personalfin...rges/index.html

 

'ASBO' for UK

banking sector

Which? has slapped an ASBO – that's an Anti-Social Banking Order – on current account providers for the way they treat customers using unauthorised overdrafts.

 

We're calling for the industry to take a new approach to the way consumers are charged when they slip into unauthorised overdraft.

 

We believe that consumers are suffering distress and alarm as a direct result of banks' actions, and we think they deserve an ASBO!

 

If you don't have an arranged overdraft facility and you dip into the red, or if you go over an agreed overdraft limit, you'll be using what banks call an 'unauthorised overdraft'.

 

While banks are providing a service to consumers who go into unauthorised overdraft, they're also raking in the cash – to the tune of an astonishing £3billion a year in 2004.

 

That's because they slap massive charges and interest rates on accounts that are in the red – even if the amount of the unauthorised overdraft is just a few pounds and is cleared quickly.

 

We think these charges are unfair and breach consumer credit regulations. They are disproportionate to the amount it actually costs the bank to deal with an account in the red. Indeed the decision of the Office of Fair Trading to set a £12 threshold on credit card default charges strengthens the pressure on banks to reform charges on current accounts.

 

A Which? survey has found that one in four people used an unauthorised overdraft in 2004 (the same year in which banks collectively made themselves £3billion in charges and interest on unauthorised overdrafts). Such a high volume of unauthorised overdraft users indicates that poor money management is not the cause – slipping into unauthorised overdraft is more often than not a genuine mistake.

 

Dodgy practices

. Banks automatically charge (normally around £30) if you slip into unauthorised overdraft, even if the amount of the unauthorised overdraft is just a few pounds.

. Banks may charge a higher rate of interest on your unauthorised overdraft than they do on your regular, authorised overdraft. However, we have found that some banks charge the higher rate on the full amount you are overdrawn. For example, if you have an account with a £250 arranged overdraft and you accidentally go £1 over, you could be charged the higher unauthorised overdraft interest rate on the full overdraft of £251.

. If you slip into unauthorised overdraft you won’t just be charged for going into the red. You could also be charged a similar amount each time a transaction, direct debit or standing order goes through your account while you are in the red.

. Banks do not give you any grace period in which to pay off the amount of your unauthorised overdraft before they charge you.

 

 

 

 

Which? has written to the regulators calling for:

. The industry to stop applying exorbitant charges and interest rates to accounts in unauthorised overdrafts.

. The industry to stop charging unauthorised overdraft interest rates on the authorised part of the overdraft.

. The Banking Code to be tightened so that banks must give at least 14 days' notice of charges, allowing customers to put their accounts in the black.

 

 

As a consumer you may be able to recover charges made against you and at the same time send the banks and building societies a clear message about their activities

[Gemmill 43952]

Good on them. Getting charged £35 for going £1 overdrawn is a disgrace and is basically almost pure profit for the banks. Out of order.

[Ally 0]

My interest free overdraft is an absolute god-send, surprised the banks don't actually charge students for going under they'd make millions.

[Happy Face 29]

My interest free overdraft is an absolute god-send, surprised the banks don't actually charge students for going under they'd make millions.

117109[/snapback]

 

Because when you're rich and succesful you'll move away from the bank that screwed you over royally.

 

Anyone else too poor to manage their accounts will probably remain as such so they've got no qualms about fleecing them.

[ewerk 30120]

Good article on how to get your money back here.