retail banks overdraft charges - uk parliament€¦ · student overdrafts do not incur any fees or...

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Ross McEwan ~ i bull lt Chief Executive IIRBS

Gogarburn Edinburgh

13 July 2016 EH12 1 HQ

Telephone 0131 556 8555 Direct Line 0131 523 2033 Rt Hon Andrew Tyrie MP

Chairman of the Treasury Select Committee wwwrbscom

House of Commons Committee Office 7 Millbank London SWlP 3JA

Thank you for your letter of 5 July regarding our Overdraft products I attach the answers to the six questions you tabled

Short term borrowing is an important need for RBS and NatWest customers We have simplified both the number of charges and the way we charge for Overdrafts so customers can be clear what they are paying These changes were made in line with ongoing discussions and feedback from both regulators and consumer groups Tools are available on line and in branch which allow customers to run scenarios and see what the cost would be were they to borrow via an Overdraft or alternative products

We have also invested in infrastructure to warn existing and new customers of impending charges via SMS and email so they can take action to fund their account and avoid any charges That is now done even more easily for millions of customers via the NatWestRBS Mobile App which offers instant account transfers at no cost Over the past 12 months only 16 of RBS NatWest active current account customers have used their Unarranged Overdraft

We have answered your questions on the basis of all of the on sale personal accounts which NatWest and RBS offer other Youth and Basic accounts do not offer an overdraft

Yours sincerely

Ross McEwan

The Royal Bank of Scotland Group pie Registered in Scotland No 45551 Registered Office 36 St Andrew Square Edinburgh EH2 2YB

1

Question 1 What is the daily charge for a customer using an authorised overdraft

RBS and NatWest do not apply a daily charge for using an Arranged Overdraft RBS and NatWest apply Arranged Overdraft interest and a pound6 monthly usage fee Each of these is explained below

Arranged overdraft interest Arranged overdraft interest is calculated on the daily overdrawn balance on the account

Each account has a buffer If a customer goes overdrawn by more than their buffer they will pay Arranged Overdraft interest on the whole Arranged Overdraft balance

If incurred interest will be debited from a customers account once a month after the end of their charging period Customers will receive at least 14 days notice of how much they will be charged and when

Arranged Overdraft Usage Fee pound6 per monthly charging period when the customer uses their Arranged Overdraft by more than their buffer

If incurred the Arranged Overdraft Usage Fee will be debited once a month after the end of the customers charging period Customers will receive at least 14 days notice of how much they will be charged and when

Charging period shy a customers charging period runs from month to month usually from the date they opened their account (for example if the account was opened on 15 August the charging period will run from the 151hof each month to the 14th of the next month)

The table below sets out each of the current accounts that RBS and NatWest offer with an Arranged Overdraft (excluding youth accounts and basic bank accounts which do not offer an Arranged or Unarranged Overdraft) RBS and NatWest have included the Arranged Overdraft interest rates whether or not the Arranged Overdraft Usage Fee is charged and what the customers buffer is

Account Arranged overdraft interest rate (EAR)

Buffer Arranged Overdraft Usage Fee charged

Select 1989 pound10 Yes

Reward 1989 pound10 Yes

Reward Silver 1989 pound10 Yes

Reward Platinum 1989 pound250 Yes

Reward Black 1489 pound500 Yes

Select Silver 1 1989 pound10 Yes

Select Platinum 2 1924 (RBS) pound250 No (RBS)

1 These current accounts are only on offer in the to-be divested Williams and Glyn business

2

Account Arranged overdraft Buffer Arranged Overdraft interest rate (EAR) Usage Fee charged

1989 (NatWest) Yes (NatWest)

Black3 1489 pound500 No (RBS)

Yes (NatWest)

Student and Graduate accounts

RBS and NatWest also offer a Student Account and a Graduate account which offer an Arranged Overdraft

Student overdrafts do not incur any fees or interest for using the Arranged Overdraft

Graduate accounts are available for two years Graduate accounts do not charge the Arranged Overdraft Usage Fee but interest may be charged (99 EAR (RBS) 1781 (NatWest)) if they are overdrawn beyond pound2000 in the first year on the account and pound1000 in the second year on the account If the customer does exceed those thresholds they will be charged Arranged Overdraft interest on the amount of the overdrawn balance that exceeds those thresholds

Question 2 Is there a cap on the charge incurred by a customer using an authorised overdraft If so what Is the maximum charge that a customer can incur in any week month or year

The Arranged Overdraft Usage Fee is a monthly fee so there is a pound6 cap per month Whether or not Arranged interest and the Arranged Overdraft Usage Fee are incurred will depend on the individual customers usage of their Arranged Overdraft There is no cap on Arranged Overdraft interest

Question 3 What is the daily charge for an unauthorised overdraft

RBS and NatWest charge a pound6 Unarranged Overdraft Usage Fee for each day there is an Unarranged Overdraft of more than pound10 on the customers account at close of business on that day

All the accounts listed at Question 1 can incur an Unarranged Overdraft Usage Fee with the exception of the Student account

RBS and NatWest also charge an Unpaid Transaction Fee and more details about this are included in the Appendix to this response

2 These current accounts are only on offer in the to-be divested Williams and Glyn business 3 These current accounts are only on offer in the to-be divested Williams and Glyn business

3

Question 4 Is there a cap on the charge incurred by a customer using an unauthorised overdraft If so what is the maximum charge that a customer can incur in any week month or year

The Unarranged Overdraft Usage Fee is capped per charging period

Fee Amount Maximum charge

Unarranged Overdraft Usage Fee

pound6 per day for Unarranged Overdraft of more than pound10

15 fees per charging period (pound90)

Our charges are calculated and charged per monthly charging period and not on a calendar month basis A customer could in principle incur the following maximum charges in a week month or year (but this would depend on their individual charging period)

Fee Maximum weekly charge (7 days)

Maximum charge per monthly charge period

Maximum annual charge

Unarranged Overdraft Usage Fee pound42 subject to monthly cap

pound90 pound1080

Question 5 Are any other costs incurred by a customer using an unauthorised overdraft compared to an authorised overdraft - such as additional fees or interest rates

No RBSNatWest do not charge debit interest on the Unarranged element of the balance the pound6 daily fee is the only charge applied RBS I NatWest will only charge the pound6 Arranged Overdraft Usage Fee on an Arranged position In the scenario where there is no Arranged Overdraft in place and the customer goes into an Unarranged overdraft only the Unarranged Overdraft Usage Fee will apply

Question 6 What action does RBSNatWest take - if any- when a customer enters into an unauthorised overdraft

RBSNatWest has introduced a number of technical solutions processes and communication strategies to protect and support a customer when they are about to enter or have entered an Unarranged Overdraft

Strategies to help customers avoid or get out of Overdraft position

bull Act Now Alerts Act Now alerts are designed to make the customer aware of the actual or potential for an Unarranged Overdraft position - where possible - so that the customer can self correct In mid-2015 RBS and NatWest auto-enrolled the current account back book into the service for all customers where mobile or email details were held

bull Minimum balance alerts Along with Act Now alerts RBS and NatWest have also developed additional technical solutions which are designed to pre-emptively assist current account customers avoid entering an Unarranged Overdraft In particular minimum balance alerts are designed as an optional early warning to help customers to take action before becoming overdrawn and being charged an Unarranged Overdraft Usage Fee Customers can ensure that these alerts are received by them when their balance reaches a particular amount (eg if near to exceeding their Arranged Overdraft limit)

4

bull Overdraft Control this is an optional service which operates with RBS and NatWest Select Accounts Overdraft Control helps customers who wish to avoid Unarranged Overdraft use by providing additional controls to keep accounts within Arranged limits There is no monthly or annual fee associated with the set up or on-going servicing of the account Overdraft Control prevents transactions which request authorisation from being paid that would otherwise have taken the customer into an Unarranged Overdraft

Strategies to help customers when they are in an Unarranged Overdraft

bull Unarranged overdraft letter - an Unarranged Overdraft fee letter is sent the day after the customer enters into an Unarranged Overdraft of pound10 or more as at close of business the previous day This is sent on the first occurrence in a 90 day period only and includes details on how the customer can avoid charges in the future through alerts mobile and online banking and Overdraft Control

bull Unpaid Transaction letter- an Unpaid Transaction Fee letter is sent out to the customer when an item is returned If multiple items are returned unpaid all items are detailed in the letter

bull Pre-notification of interest and charges letter- this accompanies the account statement and is generated at the end of charging period and is then sent to the customer as a letter or through on line banking depending on preferences A minimum of 14 days notice is provided by the pre notification interest and charges letter before any fees or charges are applied

bull Communications to customers that would benefit from an Arranged Overdraft facility shyRBS and NatWest run communication campaigns targeting customers who have incurred Unarranged Overdraft charges (or are considered likely to) to notify them of the availability of an Arranged Overdraft (or the opportunity to increase their Arranged limit) to help them avoid the costs associated with Unarranged Overdrafts These communications appear to have been well received by customers

bull Complaints policies RBS and NatWest have in place reactive complaints policies that allow for goodwill refunds to be made to customers where appropriate These include those for customers who have incurred a first time fee for whom we refund fees where they call us to discuss options to avoid unarranged fees in the future

bull Pre-emptive financial hardship strategies RBS and NatWest have a financial difficulty referral team that operate a number of event-based triggers to identify customers who may be facing financial difficulty including evidence of regular use of Unarranged borrowing This team reach out to customers to establish if they need help with managing their finances and can provide budgeting advice or set up repayment plans that will help the customer manage their borrowing down

In addition to the tools summarised above RBSNatWest offer mobile and online account access to

allow customers to closely monitor up to date balances

5

Summary of requested charges including Unpaid fees

PCA brands

Account name

Arranged overdraft Unarranged overdraft

Unpaid transact ionfee4

Unpaid transacti on fee cap (monthly)

Paid transacti on fee

Daily fee

Monthly fee

Debit interest (EAR)

Arranged overdraft buffer

Daily fee Monthly fee

Debit interest EAR)

Unarrange dcap (monthly)

RBSN w Select Nil pound6 1989 pound10 pound6 Nil Nil pound90 pound6 pound60 Nil

RBSN w Reward Nil pound6 1989 pound10 pound6 Nil Nil pound90 pound6 pound60

Nil

RBSN w

Reward Silver

Nil pound6 1989 pound10 pound6 Nil Nil pound90 pound6 pound60 Nil

RBSN w

Reward Platinum


RBSN w

Reward Black


WampG only

Select Silver


WampG only

Select Platinum

Nil pound0(RBS)

pound6(NW)

1924(RB S)

1989N W)

pound250 pound6 Nil Nil pound90 pound6 pound60

Nil

WampG only

Black Nil fO(RBS)

pound6(NW) 1489 pound500 pound6 Nil Nil pound90 pound6 pound60

Nil

4 Where the Overdraft Control service is opted for the Unpaid Transaction Fee is not applied in the event that a debiting transaction is rejected

6

Unpaid Transaction Fee comment

RBS and NatWest charge a pound6 Unpaid Transaction Fee An Unpaid Transaction Fee is charged if

bull The customer instructs us to make a withdrawal or other payment which cannot be met from the cleared balance in the account or any unused Arranged Overdraft and

bull The Bank decides not to make the payment and create or increase an Unarranged Overdraft on the customers account

All the accounts listed at Question 1 can incur an Unpaid Transaction Fee If incurred Unarranged Overdraft Usage Fees and Unpaid Transaction Fees will be debited from a customers account once a month after the end of their charging period Customers will receive at least 14 days notice of how much they will be charged and when

Unpaid fee cap

RBSNatWest has a cap on Unpaid Transaction Fees per monthly charging period of 10 fees or pound60

7

Question 1 What is the daily charge for a customer using an authorised overdraft

RBS and NatWest do not apply a daily charge for using an Arranged Overdraft RBS and NatWest apply Arranged Overdraft interest and a pound6 monthly usage fee Each of these is explained below

Arranged overdraft interest Arranged overdraft interest is calculated on the daily overdrawn balance on the account

Each account has a buffer If a customer goes overdrawn by more than their buffer they will pay Arranged Overdraft interest on the whole Arranged Overdraft balance

If incurred interest will be debited from a customers account once a month after the end of their charging period Customers will receive at least 14 days notice of how much they will be charged and when

Arranged Overdraft Usage Fee pound6 per monthly charging period when the customer uses their Arranged Overdraft by more than their buffer

If incurred the Arranged Overdraft Usage Fee will be debited once a month after the end of the customers charging period Customers will receive at least 14 days notice of how much they will be charged and when

Charging period shy a customers charging period runs from month to month usually from the date they opened their account (for example if the account was opened on 15 August the charging period will run from the 151hof each month to the 14th of the next month)

The table below sets out each of the current accounts that RBS and NatWest offer with an Arranged Overdraft (excluding youth accounts and basic bank accounts which do not offer an Arranged or Unarranged Overdraft) RBS and NatWest have included the Arranged Overdraft interest rates whether or not the Arranged Overdraft Usage Fee is charged and what the customers buffer is

Account Arranged overdraft interest rate (EAR)

Buffer Arranged Overdraft Usage Fee charged

Select 1989 pound10 Yes

Reward 1989 pound10 Yes

Reward Silver 1989 pound10 Yes

Reward Platinum 1989 pound250 Yes

Reward Black 1489 pound500 Yes

Select Silver 1 1989 pound10 Yes

Select Platinum 2 1924 (RBS) pound250 No (RBS)

1 These current accounts are only on offer in the to-be divested Williams and Glyn business

2




Yes (NatWest)












3












pound90 pound1080








4











5


PCA brands

Account name





Daily fee

Monthly fee




Debit interest EAR)




Nil

RBSN w

Reward Silver


RBSN w

Reward Platinum


RBSN w

Reward Black


WampG only

Select Silver


WampG only

Select Platinum

Nil pound0(RBS)

pound6(NW)

1924(RB S)

1989N W)


Nil

WampG only

Black Nil fO(RBS)


Nil


6






Unpaid fee cap


7




Yes (NatWest)












3












pound90 pound1080








4











5


PCA brands

Account name





Daily fee

Monthly fee




Debit interest EAR)




Nil

RBSN w

Reward Silver


RBSN w

Reward Platinum


RBSN w

Reward Black


WampG only

Select Silver


WampG only

Select Platinum

Nil pound0(RBS)

pound6(NW)

1924(RB S)

1989N W)


Nil

WampG only

Black Nil fO(RBS)


Nil


6






Unpaid fee cap


7












pound90 pound1080








4











5


PCA brands

Account name





Daily fee

Monthly fee




Debit interest EAR)




Nil

RBSN w

Reward Silver


RBSN w

Reward Platinum


RBSN w

Reward Black


WampG only

Select Silver


WampG only

Select Platinum

Nil pound0(RBS)

pound6(NW)

1924(RB S)

1989N W)


Nil

WampG only

Black Nil fO(RBS)


Nil


6






Unpaid fee cap


7











5


PCA brands

Account name





Daily fee

Monthly fee




Debit interest EAR)




Nil

RBSN w

Reward Silver


RBSN w

Reward Platinum


RBSN w

Reward Black


WampG only

Select Silver


WampG only

Select Platinum

Nil pound0(RBS)

pound6(NW)

1924(RB S)

1989N W)


Nil

WampG only

Black Nil fO(RBS)


Nil


6






Unpaid fee cap


7


PCA brands

Account name





Daily fee

Monthly fee




Debit interest EAR)




Nil

RBSN w

Reward Silver


RBSN w

Reward Platinum


RBSN w

Reward Black


WampG only

Select Silver


WampG only

Select Platinum

Nil pound0(RBS)

pound6(NW)

1924(RB S)

1989N W)


Nil

WampG only

Black Nil fO(RBS)


Nil


6






Unpaid fee cap


7






Unpaid fee cap


7

retail banks overdraft charges - uk parliament€¦ · student overdrafts do not incur any fees or...

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