RBS charges most for unauthorised overdrafts

RBS charges most for unauthorised overdrafts

Royal Bank of Scotland (RBS) customers are being hit with the highest unauthorised overdraft charges on the high street, with fees of around £120 for a three-day overdraft, according to consumer body Which?.

The group, which is 70% owned by the taxpayer, charges fees nearly eight times higher than some of its rivals. When a customer goes overdrawn and subsequently makes three £10 withdrawals over the next three days, the bank will charge £118. By contrast, Halifax, which is part of the Lloyds Banking Group, charges £15 for a three-day £30 overdraft, while HSBC charges nothing – the bank only levies a charge on its account holders if they go more than £10 over their limit each day.

The research comes as the test case on unauthorised overdraft charges continues to wind its way through the courts.

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The case has been brought by the Office of Fair Trading (OFT) against seven banks and one building society questioning the fairness of the fees they impose when someone exceeds their agreed borrowing limit.

Thousands of customers were initially able to reclaim any charges they incurred going back several years after the OFT hinted the charges could be illegal. However, since the test case started the banks have been granted permission to put any further claims on hold until the case has been resolved.

The case is currently being heard by the House of Lords. If it finds against the banks it will pave the way for a further hearing to decide whether the charges are fair and, if not, what a fair charge would be.

Meanwhile, customers continue to be hit by wildly varied charges depending on their bank.

Phil Jones, personal finance campaigner at Which?, said: "Given the billions that have been put into the banks by taxpayers, consumers will find it difficult to understand why such high and unfair charges continue to be imposed on unauthorised overdrafts.

"We want the courts and regulators to ensure that customers are protected from potentially unlawful charging structures."

Alliance & Leicester, which is now part of Spanish banking giant Santander, has the second highest charges under the Which? scenario at £90, while Smile and the Co-operative Bank, both part of the same group, would charge £80. Barclays had the third lowest charges for people who go into the red without permission at £22.

RBS defended its charges saying that although it came out as the most expensive bank under the Which? scenario, in other circumstances it would be one of the cheaper providers.

A spokesman said: "It is misleading to make a judgment that one provider is more expensive than others on the basis of one given scenario."

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