DAN HYDE: Regulators should have acted sooner to banish rip-off bank fees
Eleven years after we launched our Fair Play on Charges campaign, highlighting the iniquities of overdraft fees, the most outrageous rip-off of them all is finally coming to an end.
The stonking fees banks levy on customers who slip into the red accidentally have always been hard to justify.
Now, under pressure from the Competition and Markets Authority watchdog, Lloyds is scrapping its unauthorised overdraft charges altogether.
Currently, it pockets as much as £86 from someone who unexpectedly goes £26 overdrawn one month.
Result: Eleven years after we launched our Fair Play on Charges campaign, highlighting the iniquities of overdraft fees, the most outrageous rip-off of them all is finally coming to an end
From November, the only time you’ll be billed is when you’ve specifically agreed to borrow money.
It’s a huge step towards making banking fairer, particularly for hard-working families who face a battle to make ends meet. Now we need NatWest, HSBC, Barclays and the rest to follow suit.
Unauthorised borrowing fees are lower now than they were in 2006, when Money Mail launched its campaign.
But it shouldn’t have taken a decade, two major inquiries by regulators and a huge case in the Supreme Court before such an obvious wrong was put right.
In the meantime, banks have made a killing, sharing in the region of £1.2 billion in overdraft fees every year.
How much better off would we be if Britain’s toothless regulators had acted sooner?
Lloyds estimates around one in ten customers will be left worse off by its changes, which include other fees, but it does admit it expects to make less profit from overdrafts overall.
Given that banks make no secret of using overdraft charges to subsidise free current accounts for customers who stay in the black, we may well see a ripple effect.
Bank bosses will soon come under pressure to find ways to cover the lost income on overdrafts, and that could result in a raft of sneaky charges elsewhere and, potentially, a push to flog us packaged current accounts, personal loans, investments and other deals that may be far more lucrative for banks than their customers.
You have been warned.
Room to roam
The new mobile roaming rules in Europe really are revolutionary.
On past trips abroad, I’ve often been so terrified about running up a massive bill that I’ve turned off the data function on my phone.
But now it costs the same as at home, I left data on during my holiday in Italy last week.
What a difference! In Florence, it was easy to get around using the phone’s map app and search for reviews of attractions and ice cream parlours.
I also took to scouring TripAdvisor in restaurants to find the dishes recommended by seasoned travellers.
But I’d urge caution. First, as our guide explains, loopholes in the EU roaming rules could mean you may spend a fortune without realising.
Second, don’t go overboard. Having the internet at your fingertips can start to ruin the fun of exploring, while for some children and grandchildren it will be tempting to stay glued to that tiny screen on holiday. Which would be a real shame.
Most firms know they’re in trouble as soon as they answer the phone to Money Mail’s letters editor Tony Hazell. And faced with a kicking in his column, most put the situation right at the double.
So how Extra Energy managed to make another bungle when fixing reader Sandra Kemball’s billing error (see here) is beyond me. For the firm then to chase her with debt collectors for cash she didn’t owe is a disgrace.
Sometimes I despair at the companies we write about in Money Mail. This is one of those times.
Extra Energy has been under investigation for a year by the industry watchdog Ofgem.
Yet, judging by our postbag, many of you are still experiencing unfathomably poor service. What is taking Ofgem so long, we don’t know, as it refuses to say.