Bank overdraft fees too complex

By January 17, 2012 No Comments

Bank overdraft charges are so complex that even mathematicians struggle to work out their cost, according to research by Which?

The consumer watchdog found that anyone using an unauthorised overdraft would find it virtually impossible to calculate how much they would be charged or to compare charges between banks, due to the complicated fee structures.

It gave a group of customers a mock bank statement and asked them to work out the cost of an unauthorised overdraft at four different banks. Despite one volunteer being a maths PhD student, none of them got all the calculations right, only managing to get seven out of 48 correct between them.

Which? researchers found that banks had a myriad of complex rules and additional fees for unplanned overdrafts.

The watchdog wants the new financial regulator, the Financial Conduct Authority, to stop unfair overdraft charges, with clear powers to tackle excessive fees and complicated structures.

Peter Vicary–Smith, the chief executive of Which? said: “It’s extremely disappointing to find that bank charges are still too high, too complex and impossible to compare.”

*reported by telegraph.co.uk*