Halifax OD Charges - Which Regulator to Complain To?

twicebittennotshy

Hi,

As many of you know, Halifax have recently changed their overdraft charging structure.

Their previous charging structure was £1 for each day that you used your arranged overdraft.

Their new structure is £0.01 per £7 of arranged overdraft used, per day, with the charge being added to the overdraft on a daily basis, therefore increasing the overdraft and the charges due.

Their justification for doing this, according to both their website and the correspondence ahead of the change, is that it's "now easier to see how much it costs when you use an overdraft" As this claim is patently dishonest - (# days used * £1) versus (((changing OD balance / 7) *£0.01)*days used) - I'd like to know which regulator is the most appropriate to complain to.

To be clear, I am not complaining about the changes themselves, although they will cost me more money, but the dishonest communication about the reason for the changes.

Thanks.

spadoosh

it wasnt £1 for every day.

It was £1 per day up to £2k £2 per day up to £2999 and £3 per day for anything over that.

If youre £3000 in to your overdraft i'd imagine its easier working out the balance /7 x 1p than it is knowing exactly at which points you went above the limits.

I think you'd be best showing your frustration by moving banks. That will directly effect them. A complaint is less likely to effect them.

twicebittennotshy

spadoosh wrote: »

it wasnt £1 for every day.

It was £1 per day up to £2k £2 per day up to £2999 and £3 per day for anything over that.

If youre £3000 in to your overdraft i'd imagine its easier working out the balance /7 x 1p than it is knowing exactly at which points you went above the limits.

I think you'd be best showing your frustration by moving banks. That will directly effect them. A complaint is less likely to effect them.

For me it was a simple calculation - if I went overdrawn on day 10 of my pay month I would incur charges of £18, £20 or £21 depending on which month it was. It is now, at best, very difficult to accurately calculate what the charges will be, particularly as the daily addition of the charges will affect the future charges levied.

I agree that moving banks is a better option than complaining, and I will do so once my overdraft is cleared, but I still maintain that the calculations are more difficult than before and therefore their justification is dishonest and should be challenged.

Tom99

[FONT=Verdana, sans-serif]The new charge is very easy to understand, 1p for £7 sounds cheap, but if your balance divides exactly by £7 the APR is 68.38% which does not sound quite so cheap.[/FONT]

twicebittennotshy

Tom99 wrote: »

[FONT=Verdana, sans-serif]The new charge is very easy to understand, 1p for £7 sounds cheap, but if your balance divides exactly by £7 the APR is 68.38% which does not sound quite so cheap.[/FONT]

My concern isn't whether it's cheap or not, but that it is no longer easy to calculate what my OD is going to cost me.

As I said above, under the old system when I go into my OD the calculation is simply the number of days until I'm next paid multiplied by £1, irrespective of of what and when I then spend, providing it doesn't take me into the next charging band, i.e. above £2k overdrawn.

With the new system when I go overdrawn the first day's charge will be that day's balance divided by 7 and multiplied by 0.01 - OK that's simple enough, but because I don't know at that point what else I will spend during the month, or when those debits will made from my account I cannot accurately calculate what the future charges will be - the will not simply be the first day's charge multiplied by the number of days remaining until pay day. Not only that, but because the OD charges are applied on a daily basis they will themselves affect the future charges. This is not a simplification of the system.

PeacefulWaters

I'd like to know which regulator is the most appropriate to complain to.

The Financial Conduct Authority is the regulator. But they don't deal with individual complaints. My understanding is that the FCA are unhappy with high fees for low overdrafts subsidising the cost of larger debts. So it's quite likely that the FCA encouraged the new charging structure.

If you want to express your dissatisfaction at the wording or pricing you should complain to Halifax. As its a point of policy for them though I'd be surprised if you made any progress. If you're unhappy with their response you can escalate to the Financial Ombudsman Service. But I'm not quite sure what that would achieve.

Best bet would be to change your method of borrowing (0% credit card perhaps) and pay down your overdraft debt.

Ballard

Halifax have made a business decision to change their overdraft structure. You can move banks if you aren’t happy with it but as far as I can see they’ve done nothing wrong so I wouldn’t suggest contacting any regulator.

twicebittennotshy

Ballard wrote: »

Halifax have made a business decision to change their overdraft structure. You can move banks if you aren’t happy with it but as far as I can see they’ve done nothing wrong so I wouldn’t suggest contacting any regulator.

I have no problem with the charging structure itself - it is my choice to use the overdraft facility they provide - but what I feel they have done wrong is to misrepresent a complication of the charging structure as a simplification. It is this that I wish to challenge. If a television advert made such a misrepresentation I would be able to complain to the advertising standards agency - which agency is the equivalent for banking?

BoGoF

You are going to get nowhere with this one.

twicebittennotshy

BoGoF wrote: »

You are going to get nowhere with this one.

It's beginning to look that way!

Isolt

they don't appear to have actually started applying these charges yet