Lloyds TSB leads the way to lower charges
by Gill Montia
Story link: Lloyds TSB leads the way to lower charges
Lloyds TSB is the first of the High Street banks to announce that it will be reducing its charges for unauthorised overdrafts, from 2nd November this year.
The bank will cut its interest rates for unauthorised borrowing by approximately one-third, whilst also lowering charges for unauthorised overdrafts and bounced cheques.
From November, customers who had been charged £30 for an unauthorised overdraft will pay £15 a month plus between £6 and £20 a day, depending on the size of the overdraft.
The cost of bounced cheque, standing order, or direct debit will go down from £35 to £20.
In the six months to the end of June 2006, Lloyds refunded £36 million to customers who complained about charges that they alleged were unfair.
It is estimated that during the same period High Street banks and building societies returned £570 million in total to customer threatening to sue over charges.
The move by Lloyds TSB is likely to prompt similar responses from other leading banks.
Currently eight UK bank’s are involved in a case in the High Court which has been brought by the Office of Fair Trading to establish the legality of the penalty charges.
The outcome of the case is not expected until 2008 and Lloyds TSB is being defensive about plans to reduce its charges, describing them as a response to consumer feedback, rather than an attempt to anticipate the outcome of the High Court case.
The Consumer Action Group (CAG) has been a leading opponent of unreasonable bank charges.
On hearing the news from Lloyds, a spokesman for the CAG said that the revised charges were still excessive, given that the group estimates the true cost to a bank of sending a letter dealing with a bounced cheque is £2.00.
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