Overdrafts: what issues should MSE be raising with the industry?

MSE_James

Hi all

Here at MSE we sometimes have the opportunity to talk to industry bodies, and one of our colleagues will be talking to representatives of lenders very soon.

We've already scoured the forum to spot recurring issues that would be worth highlighting, but if you've had a recent experience of dealing with a bank with regard to an overdraft that you'd like to add to the mix, please reply here.

If you've had a problem, what could the bank have done differently to resolve the issue?

Brie

I would like my in credit interest to be a bit higher to at least be vaguely like my overdraft interest.  

eskbanker

friolento said:

I would like to see a savings account transfer mechanism that works like ISA transfers. I.e. the new provider requests some or all of the money from the old provider.

But how does that relate to the thread topic of overdrafts?

TheBanker

friolento said:

I would like to see a savings account transfer mechanism that works like ISA transfers. I.e. the new provider requests some or all of the money from the old provider.

Doesn't seem necessary to me. It's easy enough to transfer yourself. The only reason there's a special process for ISAs is to retain the tax-free status. 

MattMattMattUK

How would the banks feel about the regulator removing the silly overdraft rules they introduced last year and reform of overdrafts. Capping them at say 25-50% of monthly income, a complete ban on unauthorised overdrafts and a tightening of persistent debt rules.

eskbanker

MattMattMattUK said:

How would the banks feel about the regulator removing the silly overdraft rules they introduced last year

Which ones?  I thought the last significant regulatory change was the one four years ago, or are you thinking of something falling within the consumer duty provisions?

MattMattMattUK

eskbanker said:

MattMattMattUK said:

How would the banks feel about the regulator removing the silly overdraft rules they introduced last year

Which ones?  I thought the last significant regulatory change was the one four years ago, or are you thinking of something falling within the consumer duty provisions?

I must be getting old, I thought it was only last year. The stupid rules that said banks could only charge a single interest rate, no fees or charges etc.

friolento

eskbanker said:

friolento said:

I would like to see a savings account transfer mechanism that works like ISA transfers. I.e. the new provider requests some or all of the money from the old provider.

But how does that relate to the thread topic of overdrafts?

I didn’t read the OP 🤦🏽‍♂️

GeoffTF

MattMattMattUK said:

eskbanker said:

MattMattMattUK said:

How would the banks feel about the regulator removing the silly overdraft rules they introduced last year

Which ones?  I thought the last significant regulatory change was the one four years ago, or are you thinking of something falling within the consumer duty provisions?

I must be getting old, I thought it was only last year. The stupid rules that said banks could only charge a single interest rate, no fees or charges etc.

I thought those rules were sensible. Banning unauthorised overdrafts would be good too.

Emily_Joy

MattMattMattUK said:

 a complete ban on unauthorised overdrafts.

Wouldn't that create a lot of room for cheating? It seems that by giving details of a card that is associated to an account with insufficient funds one could escape cancellation charges and leave retailers that don't handle transactions in real time out of pocket.

Bridlington1

GeoffTF said:

MattMattMattUK said:

eskbanker said:

MattMattMattUK said:

How would the banks feel about the regulator removing the silly overdraft rules they introduced last year

Which ones?  I thought the last significant regulatory change was the one four years ago, or are you thinking of something falling within the consumer duty provisions?

I must be getting old, I thought it was only last year. The stupid rules that said banks could only charge a single interest rate, no fees or charges etc.

Banning unauthorised overdrafts would be good too.

I'd take the opposite view. Occasionally some people will dip into an unarranged OD only temporarily due to not wanting to keep money in a current account earning no interest and forgetting that a direct debit is about to be taken (I have done this myself in the past with a £2 Plum direct debit). In this instance the customer usually receives a text that morning alerting them that they've gone into an unarranged OD and then pays in funds to clear the full debt the same day before any fees are charged and no harm is done. I would argue going into the unarranged OD very briefly in these circumstances is preferable to having the DD bounce.