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Bank Charges Get Investigated

Written By On 11/04/2014

It appears that some banks' overdraft fees can work out well over double the cost of a short term loan for the same period. Their fees can be very complicated for many to understand fully.

Which? have been highlighting the issue for many months whilst the Office of Fair Trading have been trying to rectify it. The consumer group now welcomes the news that the Financial Conduct Authority, are promising to look into this matter far more closely.

The FCA commented that bank charges are

very high and may be a mechanism by which providers are increasing revenue from authorised overdrafts

A spokesman added:

Just about everybody who banks can have access to some sort of overdraft, whether they've signed up for it or not.This market is huge, and with overdrafts bolted on to over thirty million current accounts, we want to make sure it is working well for consumers.

Which? reveal that the Halifax and Santander are amongst the worst. Certain customers of theirs are prone to being charged an extra £100 fees for one month if they were to overdraw their account by £100 without authorisation.

The group say that if the same individuals were to authorised for that £100 overdraft, they would then be charged £30 for the month.

The unauthorised figures work out far more than the cost of a payday loan, which in some cases can work out as much as four times greater. Even the bank's authorised fee is comparable with a short term loan .

At present bank and building society account holders across the UK have an overdraft debt of about £8 billion. The data shows that more than one in seven of these customers are currently overdrawn and will remain this way indefinitely.

The OFT estimated that banks and building societies are receiving close to £2 billion per year extra income from their unauthorised overdraft charges.