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Question of the Week: Can banks freely change the terms and conditions on overdrafts?
Former_MSE_Lee
Posts: 343 Forumite
Q. Can banks freely change the terms and conditions on overdrafts? From Fran, by email.
Martin's A: Unfortunately the simple answer is yes, banks don’t need your permission to change any terms and conditions – but they must follow some rules. The most important one the regulator sets is they’re obliged to “communicate information to [their customers] in a way which is clear, fair and not misleading”.
This is explained in the Lending Code as consumers should be told of changes that aren’t in their interest at least 30 days in advance, and should be allowed to close the account without notice or penalties within 60 days. Changes in the consumers’ interest don’t need advance warning but we should be told of the changes within 30 days.
If you’re not happy with the changes from your bank, if possible switch – see the Best Bank Accounts guide.
Martin's A: Unfortunately the simple answer is yes, banks don’t need your permission to change any terms and conditions – but they must follow some rules. The most important one the regulator sets is they’re obliged to “communicate information to [their customers] in a way which is clear, fair and not misleading”.
This is explained in the Lending Code as consumers should be told of changes that aren’t in their interest at least 30 days in advance, and should be allowed to close the account without notice or penalties within 60 days. Changes in the consumers’ interest don’t need advance warning but we should be told of the changes within 30 days.
If you’re not happy with the changes from your bank, if possible switch – see the Best Bank Accounts guide.
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