16 October 2006
Current account holders with Lloyds TSB are to be hit by new overdraft charges.
From November 1st, the bank will abolish its £10 'buffer zone' and begin charging customers who go overdrawn by as little as one penny.
The bank will impose a minimum charge of £30 for an unauthorised overdraft. Furthermore, it will impose a further £25 for each standing order or cheque paid while the account is overdrawn, up to a maximum of three fines a day.
Justifying the move, a Lloyds TSB spokesman said: "We constantly review the features on our accounts and the removal of this buffer is just one of them. Overdraft charges are entirely avoidable and the majority of our customers don't pay unauthorised borrowing charges because they keep in credit or within their agreed overdraft limit."
However, the bank has confirmed that account holders that pay a monthly fee for the Lloyds TSB Premier or Platinum will not be subject to the new charges.
Nick White, head of personal finance at price comparison website uSwitch, said: "It is really disappointing to see that Lloyds are showing preferential treatment towards customers with fee-paying accounts. Allowing just this group of customers to benefit from a penalty fee waiver and a buffer zone for unauthorised transactions is completely illogical.
"Surely there is a strong argument that many of the non-fee paying current account customers might not be in such a strong a financial position as these customers and should not be discriminated against because they don't pay £300 a year for their account."
The Office of Fair Trading is expected to rule shortly that the overdraft fees charges by banks are excessive and must be reduced.
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