RBS cuts unauthorised overdraft charges
by Gill Montia
Story link: RBS cuts unauthorised overdraft charges
The majority state-owned Royal Bank of Scotland and its NatWest subsidiary are cutting unauthorised overdraft charges.
According to a BBC report, from 1st October, customers whose cheques bounce will pay £5 for each offence, as opposed to the current levy of £38.
At the same time, the cost incurred for payments made on an overdrawn account will fall from £30 to £15.
News of the RBS turnaround has been greeted enthusiastically by consumer groups, with Legal Beagles spokesman, Nick Spooner, expecting other banks to “follow suit quite quickly”, the BBC reports.
The Office of Fair Trading (OFT) has been trying to establish the legality of the charges – widely regarded as exorbitant – under the 1999 Unfair Terms in Consumer Contracts Regulations.
In 2008, a High Court test case that has now been running for two years ruled that the OFT had the right to decide whether or not the charges were fair.
However, the seven High Street banks involved in the case challenged the ruling and in April were granted the right to appeal to the House of Lords.
Matters will eventually be settled by the new Supreme Court, which takes over the appeal function of the House of Lords at the start of the legal year, in October.
In the meantime, around 1.2 million individuals and businesses have had their complaints over unauthorised overdraft charges frozen under a waiver granted to the banks by the Financial Services Authority.
The charges are estimated to provide UK banks with a combined annual income of £2 billion.
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