Consumers Frustrated by Unauthorised Overdraft Fees

30th August 2014

Ahead of the publication of a wide ranging Which? report on the state of the credit market, Which? calls on banks to Stop Sneaky Fees and Charges on unauthorised overdrafts, as more than two thirds of users say charges are too high or unfair.

New Which? research reveals that around 2.5 million people, approximately the same number as those that have used a payday loan, say they have used an unauthorised overdraft in the last 12 months. More than two thirds (68%) say the fees and charges are too high or unfair and around a third (36%) have been surprised by the amount they were charged.

Five weeks since the launch of the Stop Sneaky Fees and Charges campaign, nearly 25,000 people have signed up to pledge their support to put an end to fees across the financial sector that are hidden, excessive or make the total cost difficult to understand and compare.

While we welcome recent changes that providers have made, banks and current account providers are using a wide range of different charging structures that make it hard for consumers to make like for like comparisons and select the best current account product for their needs. These include charging interest, a set daily and/or monthly fee or a combination of these fees, which are in addition to set up fees or paid and unpaid transaction fees that can take customers further into the red.

In addition there is a lack of consistency in how providers display charges on their websites, which makes it difficult to calculate fees. This means consumers risk paying substantially higher charges than necessary.

Which? executive director, Richard Lloyd said:

"Consumers are fed up of being hit by complex and costly charges which make it almost impossible for them to shop around for the best deal for their needs.

“We want all banks and current account providers to Stop Sneaky Fees and Charges and put an end to excessive, unclear and hard to compare unauthorised overdraft fees that could leave consumers paying over the odds."

Which? is calling on all banks and unauthorised overdraft providers to:

Allow their customers to opt in and opt out of unauthorised overdrafts at no extra cost, with “opt out” being the default position when an account is set up.
Provide easy access transaction data for consumers as part of the Government's midata programme, so consumers can select the best current account for their needs.
Promote and encourage the use of midata in the lead up to, during and following the launch of the scheme, to make consumers aware.

You can sign up to our campaign here: www.which.co.uk/sneakyfees