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From today's Financial Times:
http://www.ft.com/cms/s/0/f61b51a8-2...#axzz3AWmKDna1
Banks simplify overdrafts ahead of review
A number of high street banks are simplifying their current account lending facilities ahead of a review of the overdraft market by the financial regulator.
HSBC this week became the latest bank to announce changes to its overdraft terms following recent updates by peers Barclays
From November, HSBC current account holders who stay within their arranged overdraft limits will only be charged interest on their borrowing, and charges levied on those who exceed them will be lowered.
The changes will also affect those who bank with First Direct, the telephone and online bank owned by HSBC.
In April, the Financial Conduct Authority announced an investigation into the UK’s £8bn overdraft market after concluding that lending facilities do not offer good value for consumers.
The regulator’s research found that many overdraft users are unaware of the charges and interest payments associated with using their accounts’ borrowing facilities.
Voluntary measures agreed between banks, the regulator and the government include making overdraft charges more transparent and introducing grace periods and buffer zones before customers incur charges.
Depending on the outcome of the FCA’s review, some of these measures may become mandatory later this year.
Another voluntary measure to be adopted by HSBC, like many of its peers, is the practice of sending out text message alerts to customers who borrow beyond their agreed limits.
“These changes have been designed to provide a simpler way for customers to understand the cost of any borrowing not agreed in advance,” said Andy Mielczarek, head of retail products at HSBC UK.
HSBC has become the latest bank to shift to daily fees for the use of unarranged overdraft facilities. Its tariff of £5 per day – capped at £80 per month – is the same as Barclays and Halifax. From August 16, Santander customers who exceed their agreed borrowing limits will face increased charges of £6 per day spent in the red.
Kevin Mountford, head of banking at Moneysupermarket.com, the price comparison site, said that overdraft interest charges have historically been confusing for consumers for whom it has been difficult to calculate their cost of borrowing.
“Although a number of banks have moved [to daily overdraft charges], it is still difficult to compare current account products easily,” said Mr Mountford.
http://www.ft.com/cms/s/0/f61b51a8-2...#axzz3AWmKDna1
Banks simplify overdrafts ahead of review
A number of high street banks are simplifying their current account lending facilities ahead of a review of the overdraft market by the financial regulator.
HSBC this week became the latest bank to announce changes to its overdraft terms following recent updates by peers Barclays
From November, HSBC current account holders who stay within their arranged overdraft limits will only be charged interest on their borrowing, and charges levied on those who exceed them will be lowered.
The changes will also affect those who bank with First Direct, the telephone and online bank owned by HSBC.
In April, the Financial Conduct Authority announced an investigation into the UK’s £8bn overdraft market after concluding that lending facilities do not offer good value for consumers.
The regulator’s research found that many overdraft users are unaware of the charges and interest payments associated with using their accounts’ borrowing facilities.
Voluntary measures agreed between banks, the regulator and the government include making overdraft charges more transparent and introducing grace periods and buffer zones before customers incur charges.
Depending on the outcome of the FCA’s review, some of these measures may become mandatory later this year.
Another voluntary measure to be adopted by HSBC, like many of its peers, is the practice of sending out text message alerts to customers who borrow beyond their agreed limits.
“These changes have been designed to provide a simpler way for customers to understand the cost of any borrowing not agreed in advance,” said Andy Mielczarek, head of retail products at HSBC UK.
HSBC has become the latest bank to shift to daily fees for the use of unarranged overdraft facilities. Its tariff of £5 per day – capped at £80 per month – is the same as Barclays and Halifax. From August 16, Santander customers who exceed their agreed borrowing limits will face increased charges of £6 per day spent in the red.
Kevin Mountford, head of banking at Moneysupermarket.com, the price comparison site, said that overdraft interest charges have historically been confusing for consumers for whom it has been difficult to calculate their cost of borrowing.
“Although a number of banks have moved [to daily overdraft charges], it is still difficult to compare current account products easily,” said Mr Mountford.
