Banks ‘Cashing In on Indebted and Vulnerable Customers’
February 9, 2017
Major banks across the UK are consistently cashing in on the financial hardship of many of their most vulnerable customers.
That’s according to the consumer rights organisation Which?, whose research has found that unarranged overdraft fees on bank accounts are a now a very common source of problem debt.
In fact, the charity has claimed that the use of unarranged overdrafts can cost indebted consumers considerably more than using payday loans, which are notoriously associated with extremely high interest rates.
Part of the problem with using overdrafts without prior authorisation is that consumers can be charged fees on the basis of monthly billing periods rather than in relation to the amounts of money borrowed or the length of time involved.
All of which can leave bank customers paying much more to borrow small sums of money via overdrafts than would be the case if they used payday lenders, Which? has said.
“It’s not right that people with a financial shortfall can be charged so much more by the big high street banks than they would by a payday loan company – especially if the money is borrowed over two monthly charging periods,” said Vickie Sheriff, director of campaigns and communications at Which?
“If banks can continue to set their own charges, then consumers will continue to be hit by exorbitant fees,” she said.
“The Financial Conduct Authority must use its current review to cap these high charges and ensure consumers cannot be charged more for unarranged overdrafts than arranged overdrafts.”
Which? has also highlighted a recent investigation by the Competition Markets Authority (CMA) which found that just over half (51 per cent) of all bank account overdraft users go into an unauthorised overdraft at some stage.
The organisation is concerned that not enough is being done to prevent customers of all the major high street banks in the UK from being hit by expensive fees when they use an overdraft without authorisation while already struggling with debt problems.
If you live anywhere in Scotland and are finding it difficult to cope with your personal finance issues on your own then Scotland Debt Solutions can help. You can contact any of our offices today to arrange a free and confidential consultation.
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