en-us http://backend.userland.com/rss Your Friends @ Myvesta.org.uk (stever@myvesta.org) myvestaukblog_archive.html stever@myvesta.org 115987925731138755 Big banks are putting the squeeze on customers in attempt to boost their revenues in anticipation of a clampdown on charges by the Office of Fair Trading (OFT).

Financial institutions are preparing for a clampdown on overdraft charges, following a ruling by the OFT in April, which stated that credit card fees were excessive and should be capped at £12. The OFT has turned its attention to current accounts and it is expected to make a similar ruling on overdraft charges early next year.

If the banks are forced to reduce these fees it will impact their profits as customers pay an estimated £4.6billion a year in current account charges. Many are therefore pre-empting the OFT’s decision by hiking rates and increasing the number of circumstances in which customers will be charged for going overdrawn.

From next month, Lloyds TSB customers who slip into the red will be given no leeway to avoid a £30 penalty. Like many other banks, Lloyds currently gives customers a £10 buffer in case they slip into the red by mistake. Those who go overdrawn by a couple of pounds will not be charged a fee, although interest will be charged.

However, from November 1, Lloyds is removing this buffer. Any customer that goes overdrawn without permission or exceeds their agreed overdraft limit will be charged £30 a day. If a direct debit or cheque is bounced, the fee is £35.

A spokeswoman for Lloyds said: "The majority of customers won’t be affected as they stay within their agreed limits. We also make it very clear that it is easy to arrange an overdraft facility."

However, the bank is accused of using this as a sneaky way of boosting its revenues. Nick Whit at Uswitch.com, a comparison site, said: "This is clearly a tactic from Lloyds TSB to increase revenue before the OFT finalises the overdraft investigation."

Lloyds has also recently increased its overdraft rates. The authorised borrowing rate on its Classic Plus account has gone up from 15.9 per cent to 18.4 percent. It is not alone. Natwest, HSBC, Royal Bank of Scotland, Smile, Yorkshire Bank and Clydesdale also hiked their rates last month.

Lisa Taylor at Moneyfacts, another comparison service, said: "The likely cause of these increases is the threat that the OFT will force them to cut their fees. Increased overdraft rates may go unnoticed by consumers. But with many reliant on their overdraft facility for their day-to-day living, these small increases could prove to be a large revenue earner for the banks."

The Times
October 3rd, 2006