Five Questions About: Current account changes

 

What's the latest development?

Ministers have set down new standards on unarranged overdraft charges. Banks must make them "clearer, fairer and more manageable".

What do the changes mean?

Consumers will be able to receive alerts by text when their balance is low, so they can take action to avoid a charge. Buffers will be introduced beyond agreed overdrafts, so if a limit is exceeded by a small amount, customers will not be hit with fees. Customers will also be sent annual statements by their bank detailing exactly how much their account has cost them over the year. If customers are unhappy, the measures will make it easier for them to switch current accounts as banks will be required to redirect all payments in and out of one account and into a new one, within seven working days.

When will the changes take effect?

Balance alerts will be available from next March. Other measures will be implemented from March 2013 at the latest, aside from guaranteed seven-day switching service which will come into play in September 2013.

Which banks will the measures apply to?

The measures are voluntary but Barclays, HSBC, Lloyds, Royal Bank of Scotland and Santander have signed up. The rules will apply to 85 per cent of bank customers.

Are the measures good enough?

Critics claim that the measures are "tinkering around the edges" and will not fully protect customers from unauthorised overdraft charges. However, they have been broadly welcomed as a step in the right direction.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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