Overdraft fees to be capped

Overdraft fees to be capped
17 May 2016

Overdraft charges are a rip-off, and everyone knows it. Well, things are being shook up in the banking world, and the Competition and Markets Authority have told finance institutions that they need to be more forgiving, and more patient for those who go into theirs.

The CMA has also called for caps on monthly overdraft fees, and for banks to help customers out by offering more prominent warnings for those who look like they're going to enter their unarranged overdraft.

One thing could be the introduction of a grace period, where someone goes into an unarraged overdraft, but are given some time to get out of it, without being hit with penalties.

All in all, this means a lot of savings for everyone, which is clearly good news.

The CMA think that these changes will save customers £1 billion over five years, which is an average of £116 per account.

They said: "At present, it is hard for bank customers to work out if they are getting good value. Bank charges are complicated and opaque and many customers think it is difficult and risky to change banks."

For those thinking of switching banks accounts, the CMA would like to see changes there too.

They once again called for a price comparison website to help the people of the UK when it comes to switching bank accounts... or indeed, switching banks entirely.

For this to happen, banks need to free up the information with they have on customers, so they can share their banking history, so they can get a better deal for themselves.

These suggestions are in place of calls for the banks to be broken up entirely. The CMA, at the moment, think that breaking them up is unnecessary if their recommendations are taken on.

There's more recommendations to come, and the final report will be published in August.

TOPICS:   Banking

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