Penalty charges cast a chill over friendly overdraft

NOW THAT several banks have put up their charges for unauthorised overdrafts, customers need to be on their guard. The days are long gone when a friendly chat with the bank manager would be enough to sort out a temporary loan, as David Atkins has discovered.

Mr Atkins, a retired photographer who lives in The Netherlands, has a Flexaccount current account with the Nationwide Building Society that he uses occasionally when he visits the UK. Normally he arranges to transfer money into the account before coming here, but recently he did not have time to do this.

He said he telephoned his branch of the Nationwide on his arrival in the UK on 15 April and explained the situation. His understanding was that the manager agreed to let him run into overdraft until he had time to transfer funds.

He knew this was an emergency facility and that he would have to pay the society's unauthorised loan rate of 2.1 per cent (28.3 per cent annually). But he was not prepared for the charges that were debited from his account over the next three weeks. These came to pounds 91.72 and included pounds 20 each for a series of bounced cheques and a standing order and the pounds 10 fee the society levies for overdrafts over pounds 100.

Nationwide agreed to waive some of the charges after Mr Atkins complained, then agreed to waive all the charges after the intervention of the Independent.

A spokesman for the society said that no overdraft of any type had been agreed and there must have been a misunderstanding. Although the society could agree an overdraft instantly over the telephone, this had not happened in Mr Atkins's case.

'I would not have had this sort of experience in Holland,' Mr Atkins said. 'The banking system there is much more user-friendly. Banks seem so rigid and inflexible in Britain.'