Almost all of Britain's high street banks have overhauled their overdraft charges over the past couple of years, deciding not to wait for the outcome of the bank charges test case, which has been under way since January, and which will, ultimately, settle what is fair and what is not fair when it comes to current-account fees.
Although it's encouraging that they've not used the lengthy court case as an excuse to carry on hitting consumers with punitive charges, each bank's big overhaul has proved a missed opportunity. While the talk is always of "fairer" and "clearer" fees, a dig down into the small print always reveals that the new policies are not quite as consumer-friendly as they might be.
Take Lloyds TSB, for example, which cut the charge for customers busting their overdraft limit from £30 to £15 last year. Great news.
Or rather it would have been, if the bank hadn't also started charging overdrawn customers a daily fee for sitting in the red, rather than a straightforward interest rate. The result has been that many customers now pay much more than they did for being overdrawn at Lloyds – and if you convert the fees into an annual percentage interest rate, it works out at something like a quintillion per cent for some of their customers.
Then there was HSBC, which said that it wouldn't charge its customers anything for busting their overdraft limit, as long as they didn't do it more than once a year. A slip into the red would simply be treated as an "overdraft request", the bank said, and everyone could have one of those for free every 12 months. How very reasonable that was.
Or, rather, it would have been, had it not also introduced a new annual "overdraft review", which meant that everyone would use up their "free" overdraft request automatically each year, anyway, thereby ensuring that they would always get charged if they did bust their limit.
So you'll understand that I was somewhat sceptical when a press release dropped into my inbox on Thursday, announcing that Barclays was becoming the latest bank to change its charging structure.
As of 18 August, every Barclays customers will be given a buffer beyond their agreed overdraft limit, for which they'll be charged a flat fee of £22 every time they run into it.
As long as customers get back into the black within five working days, there'll be no extra fees, and you'll be charged no interest while you're within the boundaries of the buffer. Furthermore, the extra leeway should mean there's rarely a need to bounce cheques or other payments. Previously, Barclays customers were charged £30 for busting their limit, and £35 for bounced payments.
Having had a good look at the small print, I have to say that this seems to be the most sensible system to have been implemented so far. While £22 is still too high, at least Barclays' system is relatively easy to understand and does not appear to be claiming to be anything it isn't.
As I've said before, I think banks have every right to charge people for busting their overdraft limit. But the charge that you get hit with should be proportionate to the bank's cost – not simply a penalty – and it should be easy to understand as well.
Thankfully, this is where the Office of Fair Trading seems to be coming from too – and if it wins its case, as looks likely, it's sure to put pressure on banks to bring down their charges even further.
At that point, banks like Barclays should hopefully be able to fall into line relatively easily.
But for the others, who have tied themselves up in ever more complex charging structures, there'll probably be no alternative but another redesign of the whole system.
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