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As part of its review into the retail banking market the CMA is looking closely at unauthorised borrowing charges for overdrafts.
Whilst forcing banks to clearly show a Monthly Maximum Charge (MMC) for unauthorised overdraft charges will enable consumers to see which banks are cheaper in this area – in reality if these customers are frequently in excess of their agreed overdraft limit they will find it difficult to transfer their accounts to a new provider as most banks will deem them too risky.
The introduction of mandatory text alerts for unauthorised borrowing situations can only be viewed as positive as it should help some people reduce their charges, however for others with deeper debt related issues this is unlikely to make much difference as they are less likely to have funds available to rectify their balance at short notice.
Although no mandatory MMC has been imposed, the range of maximum monthly charges varies quite widely at present – e.g. Barclays £35 to Halifax £100 – it will be interesting to see if any providers reduce their maximum charges in the coming months in light of the CMA report and whether this will have a detrimental impact on credit interest or rewards currently paid.
A robust but easy to use current account comparison service is ultimately what’s needed and it will be interesting to see what this looks like once delivered – it needs to be straightforward to use and less clunky than mi-data if it is to succeed.
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