Is Lloyds Tsb Bank Charge Reduction As Good As It Seems?
Lloyds TSB the first of the UK's big banks to announce the cutting of its charges for unauthorized overdraft
Recently Lloyds TSB became the first of the UK's big banks to announce that it was cutting its charges for unauthorized overdraft borrowing, returned direct debits, and bounced cheques. The Office of Fair Trading and various campaign groups have been putting on the pressure for many months after these banks charged were labelled unfair and unlawful. Lloyds TSB, along with the other big banks, has had to pay out millions of pounds in returned penalty charges to claimants going back up to six years.
Officials from Lloyds TSB stated recently that the fee structure on charges was going to change, stating that it wanted to make sure that its changes were in the best interests of the customer. However, campaigners are now stating that the changes to Lloyds' charging structure may not be as good as they seem, and that some customers may, in fact, find themselves even worse off than they were under the old charging structure.
Lloyds had been charging close to 30% on its unauthorized overdraft borrowing rate, and this is set to fall to between 10% and 20% from the beginning of November. The fee for bounced cheques will be cut to £20 from £35. Under the old charging structure customers exceeding their overdraft limit were charged £30 but there was a maximum of three charges per month. However, under the new structure this will be a monthly penalty of £15, along with daily charges of between £6 and £20 for up to ten days. Campaigners are now stating that customers that go over their limit by £100 over the course of the month could end up with fees that come to £200, which is too excessive.
Following Lloyds' announcement a number of other banks have announced reductions in their unauthorised overdraft borrowing charges. A test case is due to go ahead next year with regards to bank charges, but the Office of Fair Trading has recently announced that if bank charges are reduced to the satisfaction of the OFT then the test case may be dropped.