First Direct revamping current accounts

john539

holly90 wrote: »

Hello! This is my first post. I've joined this forum because I'm too embarrassed to ring up First Direct and admit that I don't understand the changes to their overdraft service!!! I'm SUPPOSED to be an intelligent person but I'm confused. For 15 years now, we've banked with them, and have taken comort from having a £250 fee-free overdraft facility to draw on whenever needed. I've been dipping into that quite a bit recently while bearing some additonal expenses relating to our youngest child's departure to Uni and I've found it very useful. I really don't understand this business about 'informal and 'formal' overdrafts. I'd never go overdrawn without asking first, but will I still be able to use that £250 or will that be gone from 1st October and will I have to ring up and ask each time I want overdraw by even the tiniest amount?

I don't blame you, I was confused & annoyed by the leaflet I received.
(Initially I thought I was going to have pay £25 each year for the overdraft facility !!)

Reading it a 2nd time, I think I now understand it.

In future I think you will have to ask for your "formal" annual overdraft each year.

I expect they will contact you, tell you when your current overdraft will terminate & you will have to contact them to agree another year's overdraft facility.

It may or may not be straightforward & automatic to get the £250 overdraft they have always given, but it gives them the excuse to discuss you account, how much you use the overdraft & whether they think you are paying enough money into the account.

If you ask for more than one change in the Overdraft in last 6 months, you will have to pay a £25 Arrangement Fee.

I use the £250 overdraft a lot & previously they suggested I close my account as I wasn't paying enough money in.

So I'm a bit worried about how this will work, as when I phone to ask for this Formal Annual Overdraft they may not want to agree to it, may want me to pay more money in or even close the account !!

CopperPlate_2

The difference (in laymans terms I think) between the 'formal' and 'informal' OD is this (if I've got it right)

Formal - is where you specifically request an OD, say a limit of £500 or as will come as standard with the 1st Account, £250 interest free. If the £250 wasn't enough, you could request a higher OD and they may or may not grant it. Regardless, if you make such a request it is classed as a 'formal' OD.

The term 'informal' is used instead of 'unauthorised' OD - i.e. where you go over your agreed OD level (or go overdrawn where you don't have an OD at all). The terminology means that if, hypothetically, you don't have an OD or you breach your limit, then the bank receives the request for the 'overdrawn' funds and treats this 'request' as an 'informal' request to either extend your OD or grant an OD if one doesn't exist. It then grants the informal request or declines it. Either way, you end up being charged an 'informal' OD arrangement fee of whatever it is (£25 I think).

Anyway, here's the appropriate T&C's:

6 Borrowing from us

6.1.1 You can request an overdraft, or an increase to an existing overdraft limit, on your bank account (but not on a savings account) by either:

making a formal request, that is, you ask us for and we agree to provide you with, an overdraft or an increase to an existing overdraft limit before you authorise any payments or withdrawals from your account that, if made by us, would cause your account to go overdrawn or over an existing overdraft limit; or
by way of an informal request, that is, where you authorise a payment or withdrawal to be made from your account which, if made by us, would cause your account to go overdrawn or over an existing overdraft limit, without having agreed with us in advance an overdraft or an increase to an existing overdraft limit on your account to cover such payment.
6.1.2 If we receive a formal request for an overdraft or an increase to an existing overdraft limit from you, we will consider your request and, if we agree to it, we will give you a letter setting out the terms of the overdraft. An Arrangement Fee may be charged if we agree to your formal request. We may agree to provide you with another overdraft at the end of the term of your facility and, if we do so, an Arrangement Fee may be payable. Please refer to Part 1, Clause 9 for more details about our charges.

6.1.3 If we receive an informal request for an overdraft or an increase to an existing overdraft limit from you, we will consider your request and if we agree to it, we will provide you with an overdraft or an increase to your existing overdraft limit to cover the item concerned for 31 days. An arrangement fee may be charged if we agree to your informal request. You will not be charged further arrangement fees provided your account does not go any further overdrawn. However, if your account goes into credit, or the overdrawn balance on your account decreases, and you then make another informal request for an overdraft and we agree to such a request, we may charge you a further arrangement fee. If we do not agree to an informal request from you for an overdraft or an increase to an existing overdraft limit, then we will not make any payment authorised by you that would cause your account to go overdrawn or over any agreed overdraft limit. We may charge you for considering and returning these informal payment requests. Please refer to Part 1, Clause 9 for more details about our charges. If you do require an overdraft or an increase to an existing overdraft, it would be in your interests to contact us to discuss your borrowing requirements as it would probably be cheaper for you to have a formal overdraft than several informal overdrafts.

Hope this helps!

CP

CopperPlate_2

john539 wrote: »

I don't blame you, I was confused & annoyed by the leaflet I received.
(Initially I thought I was going to have pay £25 each year for the overdraft facility !!)

Reading it a 2nd time, I think I now understand it.

In future I think you will have to ask for your "formal" annual overdraft each year.

I expect they will contact you, tell you when your current overdraft will terminate & you will have to contact them to agree another year's overdraft facility.

It may or may not be straightforward & automatic, but it gives them the excuse to discuss you account, how much you use the overdraft & whether they think you are paying enough money into the account.

If you ask for more than one change in the Overdraft in last 6 months, you will have to pay a £25 Arrangement Fee.

I use the overdraft a lot & previously they suggested I close my account as I wasn't paying enough money in.

So I'm a bit worried about how this will work, as when I phone to ask for this Formal Annual Overdraft they may not want to agree to it, may want me to pay more money in or even close the account !!

smile started doing this last year when they amended their current account terms. Their 12 months OD suddenly became reviewable every year. They sent a secure message a month or so before the 12 months saying that the OD was coming to an end and to reply to the message saying that I still wanted it. Once they received that I had to wait a couple of days for a positive reply on one account and received a virtual instant reply on the second account, both continued for the further 12 months and both offering to increase it substantially despite not really being used to the max. No longer with smile and now with fd but I'd imagine it would be done the same way rather than having to phone them.

john539

EagerLearner wrote: »

I'm guessing that an informal overdraft is the one they give you automatically (£250) and that a formal one is something that you arrange with them, if you need more than the automatic £250 they give you?

The Automatic £250 Overdraft is coming to an end !!

You will have to ask each year for a the equivalent Formal Annual Overdraft & they will have to agree to it.

This is a major change on their current account.

john539

CopperPlate wrote: »

...or as will come as standard with the 1st Account, £250 interest free. If the £250 wasn't enough, you could request a higher OD and they may or may not grant it.

I have not seen anything that says a standard overdraft is included with the new 1st account.

First Direct only say it will be "Interest Free Overdraft" in leaflets.

deano8000

I think rather speculating what it says why dont you ring them (at least its another human), as i understood when i queried it and this may not be the case for everyone if you go your agreed overdraft within 6 months they will increase your o/d limit free of charge (formal) if you then go over it again within the same 6 month period then you would be charged(informal) however if you go over after 6 months of the original increase then this would be free of charge (formal) but i suppose it will depend on ppl's circumstances.
I do like the look of the new card looks quite modern.

CopperPlate_2

john539 wrote: »

I have not seen anything that says a standard overdraft is included with the new 1st account.

First Direct only say it will be "Interest Free Overdraft" in leaflets.

My apologies, in my mind if you're looking for an OD and fd are offering the 1st Account with an OD, subject status, then I'd call the £250 'standard'.

"A completely interest free £250 overdraft facility, subject to status. An Arrangement Fee may apply if you request an overdraft more than once every 6 months. Overdrafts above £250 will be charged at 12.9% EAR variable." - from the fd website.

From the current 'bank account' webpage:

an automatic overdraft of £500
To help you with your budgeting, when you open a first direct Bank Account, you will receive an automatic £500 overdraft for up to 12 months (on your first account only). And for those of you who need a bigger cushion, we can always discuss a larger overdraft (charges may apply).

All overdrafts are subject to status

I can see that the caveat of 'subject to status' was included there too, so I can't see where it ever said that an OD was guaranteed regardless of the term 'automatic' being used. It was always a case that you might get it, and then again, you might not...depending on your status.

john539

Anyway, here's the appropriate T&C's:

6 Borrowing from us

6.1.1 You can request an overdraft, or an increase to an existing overdraft limit, on your bank account (but not on a savings account) by either:

making a formal request, that is, you ask us for and we agree to provide you with, an overdraft or an increase to an existing overdraft limit before you authorise any payments or withdrawals from your account that, if made by us, would cause your account to go overdrawn or over an existing overdraft limit; or

by way of an informal request, that is, where you authorise a payment or withdrawal to be made from your account which, if made by us, would cause your account to go overdrawn or over an existing overdraft limit, without having agreed with us in advance an overdraft or an increase to an existing overdraft limit on your account to cover such payment.

6.1.2 If we receive a formal request for an overdraft or an increase to an existing overdraft limit from you, we will consider your request and, if we agree to it, we will give you a letter setting out the terms of the overdraft. An Arrangement Fee may be charged if we agree to your formal request. We may agree to provide you with another overdraft at the end of the term of your facility and, if we do so, an Arrangement Fee may be payable. Please refer to Part 1, Clause 9 for more details about our charges.

6.1.3 If we receive an informal request for an overdraft or an increase to an existing overdraft limit from you, we will consider your request and if we agree to it, we will provide you with an overdraft or an increase to your existing overdraft limit to cover the item concerned for 31 days. An arrangement fee may be charged if we agree to your informal request. You will not be charged further arrangement fees provided your account does not go any further overdrawn. However, if your account goes into credit, or the overdrawn balance on your account decreases, and you then make another informal request for an overdraft and we agree to such a request, we may charge you a further arrangement fee. If we do not agree to an informal request from you for an overdraft or an increase to an existing overdraft limit, then we will not make any payment authorised by you that would cause your account to go overdrawn or over any agreed overdraft limit. We may charge you for considering and returning these informal payment requests. Please refer to Part 1, Clause 9 for more details about our charges. If you do require an overdraft or an increase to an existing overdraft, it would be in your interests to contact us to discuss your borrowing requirements as it would probably be cheaper for you to have a formal overdraft than several informal overdrafts.

Here's the link to this:

Important Information: Our Bank Account - from 1 October 2007
http://www.firstdirect.com/legals/nov_terms.shtml#borrowing

john539

CopperPlate wrote: »

My apologies, in my mind if you're looking for an OD and fd are offering the 1st Account with an OD, subject status, then I'd call the £250 'standard'.

All overdrafts are subject to status

I can see that the caveat of 'subject to status' was included there too, so I can't see where it ever said that an OD was guaranteed regardless of the term 'automatic' being used. It was always a case that you might get it, and then again, you might not...depending on your status.

Yes, "Subject To Status" is open to interpretation.

We'll have to see how this new system of agreeing Annual Overdrafts works in practice.

I'm sure they haven't introduced for no reason.

Like any business having an excuse to "talk to your customers" is very useful to sell more products or get rid of unprofitable sub-prime accounts.

anandp

Just read a post in another thread saying Nationwide's customer service is as good as FD's.

Their current account (Flexaccount) pays 4.75% interest and they have a good internet banking service too.

Can anyone else vouch for Nationwide's customer service?