Retail banks overdraft charges - UK Parliament€¦ · leading basic bank account, which does not...
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mon ey One Eagle Place Piccadilly SWlY 6AF Rt Hon Andrew Tyrie MP Chairman of the Treasury Select Committee Treasury Select Committee House of Commons, Committee Office 14 T othill Street London SWlH 9NB 21 July 2016 Current account charges Dear Andrew, Thank you for your letter of 5 July. We welcome the Committee's continued focus on ensuring that there is genuine competition and choice in the UK retail banking market. Virgin Money is committed to offering simple, clear products to make it easier for our customers to manage their money. As a result, we took the decision to remove from sale in 2012 the current account product we inherited when we acquired Northern Rock in 2012. We continue to service those customers who hold one of these accounts. However, at the end of 2015, just 410 of these customers were in authorised overdraft and only 290 were in unauthorised overdraft. This reflects our policy of restricting overdraft usage by our customers. In place of this product, we launched in 2014 our Essential Current Account (ECA). This is a market- leading basic bank account, which does not have an associated overdraft facility and pays credit interest on balances up to £ 100,000. All customers holding a Northern Rock current account have the option of switching to the ECA. We feel that it would be helpful if your investigation into Personal Current Account (PCA) overdrafts were positioned in the context of a broader examination of free-if-in-credit (FIIC) banking, preferably before the Competition and Markets Authority (CMA) finalises its remedies. As we set out in our recent responses to the CMA we believe that the PCA market will not function effectively for consumers until there is transparent headline pricing for all consumers. We also feel that the CMA should have gone much further in addressing the competitive distortion arising from FIIC banking. Whilst the FIIC model serves some consumers extremely well, in particular those consumers who do not go overdrawn and/or do not have large positive credit balances, other consumers - particularly persistent overdraft users - are very poorly served. In effect these consumers end up subsidising free banking for others. We continue to believe that the FIIC model is only sustainable as a result of this cross subsidisatiof. (\ w~,a Moaey ,,, - "'''""" m '""''"" sa~s, ,i. "'"""" .-< w,,~ (Como•~ '° · Offlre - u,,,, erure. ,-•. "="" """' '"" "'"" • Authorised by the Prudential Regulation Authority and regulated by the F1nanc1al Conduct Authority and the Prudential Regulation Authority V~-1a
Transcript of Retail banks overdraft charges - UK Parliament€¦ · leading basic bank account, which does not...
money
One Eagle Place Piccadilly SWlY 6AF
Rt Hon Andrew Tyrie MP Chairman of the Treasury Select Committee Treasury Select Committee House of Commons Committee Office 14 T othill Street London SWlH 9NB
21 July 2016
Current account charges
Dear Andrew
Thank you for your letter of 5 July
We welcome the Committees continued focus on ensuring that there is genuine competition and choice in the UK retail banking market
Virgin Money is committed to offering simple clear products to make it easier for our customers to manage their money As a result we took the decision to remove from sale in 2012 the current account product we inherited when we acquired Northern Rock in 2012
We continue to service those customers who hold one of these accounts However at the end of 2015 just 410 of these customers were in authorised overdraft and only 290 were in unauthorised overdraft This reflects our policy of restricting overdraft usage by our customers
In place of this product we launched in 2014 our Essential Current Account (ECA) This is a marketshyleading basic bank account which does not have an associated overdraft facility and pays credit interest on balances up to pound 100000 All customers holding a Northern Rock current account have the option of switching to the ECA
We feel that it would be helpful if your investigation into Personal Current Account (PCA) overdrafts were positioned in the context of a broader examination of free-if-in-credit (FIIC) banking preferably before the Competition and Markets Authority (CMA) finalises its remedies
As we set out in our recent responses to the CMA we believe that the PCA market will not function effectively for consumers until there is transparent headline pricing for all consumers We also feel that the CMA should have gone much further in addressing the competitive distortion arising from FIIC banking
Whilst the FIIC model serves some consumers extremely well in particular those consumers who do not go overdrawn andor do not have large positive credit balances other consumers - particularly persistent overdraft users - are very poorly served In effect these consumers end up subsidising free banking for others
We continue to believe that the FIIC model is only sustainable as a result of this cross subsidisatiof (
w~a Moaey - m sa~s i -lt w~ (Comobull~ degmiddot Offlre - u erure -bull= ~~ bull Authorised by the Prudential Regulation Authority and regulated by the F1nanc1al Conduct Authority and the Prudential Regulation Authority V~-1a
We welcome the CMAs proposal to require all PCA providers to introduce and publicise a monthly maximum charge (MMC) for the use of unarranged overdrafts However we remain concerned that the proposed MMC - whilst potentially affording some direct protection to the very highest unauthorised overdraft users who would see the level of their charges reduced - is likely to benefit only a small group of customers
This is because the MMC applies only to unarranged overdrafts and because the CMA has provisionally decided to allow banks to set their own individual MMC As a result we would expect the large incumbent banks to try to limit the potential loss of revenue from the MMC by setting high MMCs
We have therefore suggested that the CMA should consider
bull Imposing a regulatory cap on MMCs This would be equivalent to the regulatory caps that have been imposed on credit card interchange fees and on mobile roaming charges andor
bull Prohibiting banks from increasing existing charges or introducing new charges to offset the impact of the cap on MMCs This would be equivalent to the approach taken in the Interchange Fee Regulations which imposed regulatory caps on debit and credit card interchange fees
Our detailed answers to your six questions are set out in the attachment to this letter
As ever we would be delighted to assist the Committee in any way that we can
hie ecutive Officer Virgin Money
Virgin Money pie - Registered in England and Wales (Company No 6952311) Registered Office - Jubilee House Gosforth Newcastle upon Tyne NE3 4PL Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority VM3442_1013
Virgin Money Response to Treasury Committee Questions on Current Account Charges
1 Background
Virgin Money currently has just one Personal Current Account (PCA) on the market shythe Essential Current Account (ECA)
Virgin Money also has a small closed book of Virgin Money Current Accounts (YMCA) acquired from Northern Rock in January 2012
These two current accounts are described below
We aspire to offer a broader range of current accounts in the future including a digital current account We hope that the remedies arising from the CMAs Retail Banking Market investigation will support this objective
2 Virgin Money Essential Current Account
In 2014 we launched our Essential Current Account (ECA) This is a market-leading basic bank account which according to MoneySavingExpertcom is one of the top three Basic Bank Accounts (BBA) on the market
The ECA does not have an associated overdraft facility in order to help customers stay in control of their money Neither does it charge for unpaid items It pays interest on credit balances (currently 1 AER on balances up to pound100000) making it the best value BBA on the market or credit interest
Furthermore we do not charge commission on overseas transactions making it the best value BBA for overseas use
Our eligibility criteria are really simple The account is available to any UK resident aged 18 or over including undischarged bankrupts This is another point of difference in the market
ECA customers enjoy all the benefits of being a Virgin Money customer including free access to Virgin Money Lounges
3 Virgin Money Current Account
Virgin Money also has a small closed book of current accounts which it inherited when it acquired Northern Rock in 2012
Re-named the Virgin Money Current Account (YMCA) this product was closed to new business in 2012 We continue to service those customers who hold one of these accounts
At the end of 2015 we had 54000 active users of the YMCA Of these customers only 410 were in authorised overdraft and only 290 were in unauthorised overdraft
4 Responses to questions
The charges incurred by VMCA customers for overdrqft usage are as follows
Authorised overdraft usage charges
Unauthorised overdraft usage charges
Customers to which Customers who have an Customers who have charges apply authorised overdraft facility exceeded their authorised
overdraft facility or
Customers who do not have an authorised overdraft facility
Monthly fee (Only charged when overdraft is used)
pound10 pound25
(For customer~ with an authorised overdraft this fee is paid instead of the pound l O fee when they exceed their approved limit)
Interest charged (EAR) on amount overdrawn (Calculated daily and payable monthly one month in arrears)
119 189
(Applied only to the unauthorised portion of the overdraft)
Unpaid item charges
pound l O per unpaid item up to monthly cap of pound70
Authorised overdraft facilities on the VMCA are only available on request and are subject to an annual assessment of creditworthiness The authorised overdraft facility if granted is limited to one third of the customers regular credits into the account over the previous three months
There is a 30-day fee-free buffer of pound20 for transactions that would otherwise take customers into authorised (or unauthorised) overdrafts
Virgin Money tries to limit use of unauthorised overdrafts There are limited circumstances in which customers can enter an unauthorised overdraft Typically these are where a customer
bull carries out a debit card transaction that is not fully authorised or bull uses the pound20 fee-free buffer and does not repay it within 30 days
Once a customers balance goes below pound0 or below their authorised overdraft limit (whichever is lower) we decline any further transactions (where authorisation is sought) and return electronic payments unpaid to prevent unauthorised borrowing
2
Action Virgin Money takes when a customer enters Into an unauthorised overdraft
Virgin Moneys processes are designed to encourage VMCA customers to move any unauthorised overdrawn balances back into credit or back into an authorised overdraft limit (where applicable) These processes are summarised below
We seek to contact customers as soon as we become aware that their accounts are in unauthorised overdraft
bull Contact in the first instance is attempted by phone and is repeated every 7 days that the account remains in unauthorised overdraft
bull A first stage letter is issued after the first attempt to make contact by phone This letter sets out the charges associated with an unauthorised overdraft requests immediate repayment of the unauthorised overdraft and asks the customer to get in touch if they need help
bull After 14 days if the account remains in unauthorised overdraft a second stage ietter is issued to the customer This reiterates the charges associated with an unauthorised overdraft details how a customer can repay the unauthorised balance gives the option of affordable repayments or help from third party debt advisors and finally confirms the action we will take to recover the money owed in line with the Consumer Credit Act 1974 We include a leaflet dealing with debt with that letter
bull After 28 days if the account remains in unauthorised overdraft a final stage letter is issued detailing the ways the customer can repay the money owed how to request an affordable repayment plan and giving fair notice of any further action we will take to recover the authorised overdraft in line with the Consumer Credit Act 1974 and how to seek help if needed
bull At the end of the charging period the customer will receive a pre-notification of charges letter confirming the charges relating to overdraft use andor unpaid items in the period
Whenever we talk to a customer about an unauthorised overdraft we offer support to those who are not able to repay any unauthorised borrowing including offering a regular repayment plan (following an affordability assessment) and by providing contact details for a number of organisations that help customers manage their debts We have a relationship with StepChange Debt Charity and refer to them any current account customers who say that they are struggling financially and would welcome help from them
We welcome the CMAs proposal to require all PCA providers to introduce and publicise a monthly maximum charge (MMC) for the use of unarranged overdrafts However we remain concerned that the proposed MMC - whilst potentially affording some direct protection to the very highest unauthorised overdraft users who would see the level of their charges reduced - is likely to benefit only a small group of customers
This is because the MMC applies only to unarranged overdrafts and because the CMA has provisionally decided to allow banks to set their own individual MMC As a result we would expect the large incumbent banks to try to limit the potential loss of revenue from the MMC by setting high MMCs
We have therefore suggested that the CMA should consider
bull Imposing a regulatory cap on MMCs This would be equivalent to the regulatory caps that have been imposed on credit card interchange fees and on mobile roaming charges andor
bull Prohibiting banks from increasing existing charges or introducing new charges to offset the impact of the cap on MMCs This would be equivalent to the approach taken in the Interchange Fee Regulations which imposed regulatory caps on debit and credit card interchange fees
Our detailed answers to your six questions are set out in the attachment to this letter
As ever we would be delighted to assist the Committee in any way that we can
hie ecutive Officer Virgin Money
Virgin Money pie - Registered in England and Wales (Company No 6952311) Registered Office - Jubilee House Gosforth Newcastle upon Tyne NE3 4PL Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority VM3442_1013
Virgin Money Response to Treasury Committee Questions on Current Account Charges
1 Background
Virgin Money currently has just one Personal Current Account (PCA) on the market shythe Essential Current Account (ECA)
Virgin Money also has a small closed book of Virgin Money Current Accounts (YMCA) acquired from Northern Rock in January 2012
These two current accounts are described below
We aspire to offer a broader range of current accounts in the future including a digital current account We hope that the remedies arising from the CMAs Retail Banking Market investigation will support this objective
2 Virgin Money Essential Current Account
In 2014 we launched our Essential Current Account (ECA) This is a market-leading basic bank account which according to MoneySavingExpertcom is one of the top three Basic Bank Accounts (BBA) on the market
The ECA does not have an associated overdraft facility in order to help customers stay in control of their money Neither does it charge for unpaid items It pays interest on credit balances (currently 1 AER on balances up to pound100000) making it the best value BBA on the market or credit interest
Furthermore we do not charge commission on overseas transactions making it the best value BBA for overseas use
Our eligibility criteria are really simple The account is available to any UK resident aged 18 or over including undischarged bankrupts This is another point of difference in the market
ECA customers enjoy all the benefits of being a Virgin Money customer including free access to Virgin Money Lounges
3 Virgin Money Current Account
Virgin Money also has a small closed book of current accounts which it inherited when it acquired Northern Rock in 2012
Re-named the Virgin Money Current Account (YMCA) this product was closed to new business in 2012 We continue to service those customers who hold one of these accounts
At the end of 2015 we had 54000 active users of the YMCA Of these customers only 410 were in authorised overdraft and only 290 were in unauthorised overdraft
4 Responses to questions
The charges incurred by VMCA customers for overdrqft usage are as follows
Authorised overdraft usage charges
Unauthorised overdraft usage charges
Customers to which Customers who have an Customers who have charges apply authorised overdraft facility exceeded their authorised
overdraft facility or
Customers who do not have an authorised overdraft facility
Monthly fee (Only charged when overdraft is used)
pound10 pound25
(For customer~ with an authorised overdraft this fee is paid instead of the pound l O fee when they exceed their approved limit)
Interest charged (EAR) on amount overdrawn (Calculated daily and payable monthly one month in arrears)
119 189
(Applied only to the unauthorised portion of the overdraft)
Unpaid item charges
pound l O per unpaid item up to monthly cap of pound70
Authorised overdraft facilities on the VMCA are only available on request and are subject to an annual assessment of creditworthiness The authorised overdraft facility if granted is limited to one third of the customers regular credits into the account over the previous three months
There is a 30-day fee-free buffer of pound20 for transactions that would otherwise take customers into authorised (or unauthorised) overdrafts
Virgin Money tries to limit use of unauthorised overdrafts There are limited circumstances in which customers can enter an unauthorised overdraft Typically these are where a customer
bull carries out a debit card transaction that is not fully authorised or bull uses the pound20 fee-free buffer and does not repay it within 30 days
Once a customers balance goes below pound0 or below their authorised overdraft limit (whichever is lower) we decline any further transactions (where authorisation is sought) and return electronic payments unpaid to prevent unauthorised borrowing
2
Action Virgin Money takes when a customer enters Into an unauthorised overdraft
Virgin Moneys processes are designed to encourage VMCA customers to move any unauthorised overdrawn balances back into credit or back into an authorised overdraft limit (where applicable) These processes are summarised below
We seek to contact customers as soon as we become aware that their accounts are in unauthorised overdraft
bull Contact in the first instance is attempted by phone and is repeated every 7 days that the account remains in unauthorised overdraft
bull A first stage letter is issued after the first attempt to make contact by phone This letter sets out the charges associated with an unauthorised overdraft requests immediate repayment of the unauthorised overdraft and asks the customer to get in touch if they need help
bull After 14 days if the account remains in unauthorised overdraft a second stage ietter is issued to the customer This reiterates the charges associated with an unauthorised overdraft details how a customer can repay the unauthorised balance gives the option of affordable repayments or help from third party debt advisors and finally confirms the action we will take to recover the money owed in line with the Consumer Credit Act 1974 We include a leaflet dealing with debt with that letter
bull After 28 days if the account remains in unauthorised overdraft a final stage letter is issued detailing the ways the customer can repay the money owed how to request an affordable repayment plan and giving fair notice of any further action we will take to recover the authorised overdraft in line with the Consumer Credit Act 1974 and how to seek help if needed
bull At the end of the charging period the customer will receive a pre-notification of charges letter confirming the charges relating to overdraft use andor unpaid items in the period
Whenever we talk to a customer about an unauthorised overdraft we offer support to those who are not able to repay any unauthorised borrowing including offering a regular repayment plan (following an affordability assessment) and by providing contact details for a number of organisations that help customers manage their debts We have a relationship with StepChange Debt Charity and refer to them any current account customers who say that they are struggling financially and would welcome help from them
Virgin Money Response to Treasury Committee Questions on Current Account Charges
1 Background
Virgin Money currently has just one Personal Current Account (PCA) on the market shythe Essential Current Account (ECA)
Virgin Money also has a small closed book of Virgin Money Current Accounts (YMCA) acquired from Northern Rock in January 2012
These two current accounts are described below
We aspire to offer a broader range of current accounts in the future including a digital current account We hope that the remedies arising from the CMAs Retail Banking Market investigation will support this objective
2 Virgin Money Essential Current Account
In 2014 we launched our Essential Current Account (ECA) This is a market-leading basic bank account which according to MoneySavingExpertcom is one of the top three Basic Bank Accounts (BBA) on the market
The ECA does not have an associated overdraft facility in order to help customers stay in control of their money Neither does it charge for unpaid items It pays interest on credit balances (currently 1 AER on balances up to pound100000) making it the best value BBA on the market or credit interest
Furthermore we do not charge commission on overseas transactions making it the best value BBA for overseas use
Our eligibility criteria are really simple The account is available to any UK resident aged 18 or over including undischarged bankrupts This is another point of difference in the market
ECA customers enjoy all the benefits of being a Virgin Money customer including free access to Virgin Money Lounges
3 Virgin Money Current Account
Virgin Money also has a small closed book of current accounts which it inherited when it acquired Northern Rock in 2012
Re-named the Virgin Money Current Account (YMCA) this product was closed to new business in 2012 We continue to service those customers who hold one of these accounts
At the end of 2015 we had 54000 active users of the YMCA Of these customers only 410 were in authorised overdraft and only 290 were in unauthorised overdraft
4 Responses to questions
The charges incurred by VMCA customers for overdrqft usage are as follows
Authorised overdraft usage charges
Unauthorised overdraft usage charges
Customers to which Customers who have an Customers who have charges apply authorised overdraft facility exceeded their authorised
overdraft facility or
Customers who do not have an authorised overdraft facility
Monthly fee (Only charged when overdraft is used)
pound10 pound25
(For customer~ with an authorised overdraft this fee is paid instead of the pound l O fee when they exceed their approved limit)
Interest charged (EAR) on amount overdrawn (Calculated daily and payable monthly one month in arrears)
119 189
(Applied only to the unauthorised portion of the overdraft)
Unpaid item charges
pound l O per unpaid item up to monthly cap of pound70
Authorised overdraft facilities on the VMCA are only available on request and are subject to an annual assessment of creditworthiness The authorised overdraft facility if granted is limited to one third of the customers regular credits into the account over the previous three months
There is a 30-day fee-free buffer of pound20 for transactions that would otherwise take customers into authorised (or unauthorised) overdrafts
Virgin Money tries to limit use of unauthorised overdrafts There are limited circumstances in which customers can enter an unauthorised overdraft Typically these are where a customer
bull carries out a debit card transaction that is not fully authorised or bull uses the pound20 fee-free buffer and does not repay it within 30 days
Once a customers balance goes below pound0 or below their authorised overdraft limit (whichever is lower) we decline any further transactions (where authorisation is sought) and return electronic payments unpaid to prevent unauthorised borrowing
2
Action Virgin Money takes when a customer enters Into an unauthorised overdraft
Virgin Moneys processes are designed to encourage VMCA customers to move any unauthorised overdrawn balances back into credit or back into an authorised overdraft limit (where applicable) These processes are summarised below
We seek to contact customers as soon as we become aware that their accounts are in unauthorised overdraft
bull Contact in the first instance is attempted by phone and is repeated every 7 days that the account remains in unauthorised overdraft
bull A first stage letter is issued after the first attempt to make contact by phone This letter sets out the charges associated with an unauthorised overdraft requests immediate repayment of the unauthorised overdraft and asks the customer to get in touch if they need help
bull After 14 days if the account remains in unauthorised overdraft a second stage ietter is issued to the customer This reiterates the charges associated with an unauthorised overdraft details how a customer can repay the unauthorised balance gives the option of affordable repayments or help from third party debt advisors and finally confirms the action we will take to recover the money owed in line with the Consumer Credit Act 1974 We include a leaflet dealing with debt with that letter
bull After 28 days if the account remains in unauthorised overdraft a final stage letter is issued detailing the ways the customer can repay the money owed how to request an affordable repayment plan and giving fair notice of any further action we will take to recover the authorised overdraft in line with the Consumer Credit Act 1974 and how to seek help if needed
bull At the end of the charging period the customer will receive a pre-notification of charges letter confirming the charges relating to overdraft use andor unpaid items in the period
Whenever we talk to a customer about an unauthorised overdraft we offer support to those who are not able to repay any unauthorised borrowing including offering a regular repayment plan (following an affordability assessment) and by providing contact details for a number of organisations that help customers manage their debts We have a relationship with StepChange Debt Charity and refer to them any current account customers who say that they are struggling financially and would welcome help from them
4 Responses to questions
The charges incurred by VMCA customers for overdrqft usage are as follows
Authorised overdraft usage charges
Unauthorised overdraft usage charges
Customers to which Customers who have an Customers who have charges apply authorised overdraft facility exceeded their authorised
overdraft facility or
Customers who do not have an authorised overdraft facility
Monthly fee (Only charged when overdraft is used)
pound10 pound25
(For customer~ with an authorised overdraft this fee is paid instead of the pound l O fee when they exceed their approved limit)
Interest charged (EAR) on amount overdrawn (Calculated daily and payable monthly one month in arrears)
119 189
(Applied only to the unauthorised portion of the overdraft)
Unpaid item charges
pound l O per unpaid item up to monthly cap of pound70
Authorised overdraft facilities on the VMCA are only available on request and are subject to an annual assessment of creditworthiness The authorised overdraft facility if granted is limited to one third of the customers regular credits into the account over the previous three months
There is a 30-day fee-free buffer of pound20 for transactions that would otherwise take customers into authorised (or unauthorised) overdrafts
Virgin Money tries to limit use of unauthorised overdrafts There are limited circumstances in which customers can enter an unauthorised overdraft Typically these are where a customer
bull carries out a debit card transaction that is not fully authorised or bull uses the pound20 fee-free buffer and does not repay it within 30 days
Once a customers balance goes below pound0 or below their authorised overdraft limit (whichever is lower) we decline any further transactions (where authorisation is sought) and return electronic payments unpaid to prevent unauthorised borrowing
2
Action Virgin Money takes when a customer enters Into an unauthorised overdraft
Virgin Moneys processes are designed to encourage VMCA customers to move any unauthorised overdrawn balances back into credit or back into an authorised overdraft limit (where applicable) These processes are summarised below
We seek to contact customers as soon as we become aware that their accounts are in unauthorised overdraft
bull Contact in the first instance is attempted by phone and is repeated every 7 days that the account remains in unauthorised overdraft
bull A first stage letter is issued after the first attempt to make contact by phone This letter sets out the charges associated with an unauthorised overdraft requests immediate repayment of the unauthorised overdraft and asks the customer to get in touch if they need help
bull After 14 days if the account remains in unauthorised overdraft a second stage ietter is issued to the customer This reiterates the charges associated with an unauthorised overdraft details how a customer can repay the unauthorised balance gives the option of affordable repayments or help from third party debt advisors and finally confirms the action we will take to recover the money owed in line with the Consumer Credit Act 1974 We include a leaflet dealing with debt with that letter
bull After 28 days if the account remains in unauthorised overdraft a final stage letter is issued detailing the ways the customer can repay the money owed how to request an affordable repayment plan and giving fair notice of any further action we will take to recover the authorised overdraft in line with the Consumer Credit Act 1974 and how to seek help if needed
bull At the end of the charging period the customer will receive a pre-notification of charges letter confirming the charges relating to overdraft use andor unpaid items in the period
Whenever we talk to a customer about an unauthorised overdraft we offer support to those who are not able to repay any unauthorised borrowing including offering a regular repayment plan (following an affordability assessment) and by providing contact details for a number of organisations that help customers manage their debts We have a relationship with StepChange Debt Charity and refer to them any current account customers who say that they are struggling financially and would welcome help from them
Action Virgin Money takes when a customer enters Into an unauthorised overdraft
Virgin Moneys processes are designed to encourage VMCA customers to move any unauthorised overdrawn balances back into credit or back into an authorised overdraft limit (where applicable) These processes are summarised below
We seek to contact customers as soon as we become aware that their accounts are in unauthorised overdraft
bull Contact in the first instance is attempted by phone and is repeated every 7 days that the account remains in unauthorised overdraft
bull A first stage letter is issued after the first attempt to make contact by phone This letter sets out the charges associated with an unauthorised overdraft requests immediate repayment of the unauthorised overdraft and asks the customer to get in touch if they need help
bull After 14 days if the account remains in unauthorised overdraft a second stage ietter is issued to the customer This reiterates the charges associated with an unauthorised overdraft details how a customer can repay the unauthorised balance gives the option of affordable repayments or help from third party debt advisors and finally confirms the action we will take to recover the money owed in line with the Consumer Credit Act 1974 We include a leaflet dealing with debt with that letter
bull After 28 days if the account remains in unauthorised overdraft a final stage letter is issued detailing the ways the customer can repay the money owed how to request an affordable repayment plan and giving fair notice of any further action we will take to recover the authorised overdraft in line with the Consumer Credit Act 1974 and how to seek help if needed
bull At the end of the charging period the customer will receive a pre-notification of charges letter confirming the charges relating to overdraft use andor unpaid items in the period
Whenever we talk to a customer about an unauthorised overdraft we offer support to those who are not able to repay any unauthorised borrowing including offering a regular repayment plan (following an affordability assessment) and by providing contact details for a number of organisations that help customers manage their debts We have a relationship with StepChange Debt Charity and refer to them any current account customers who say that they are struggling financially and would welcome help from them
