Some Santander customers will no longer pay fees if they go into an unarranged overdraft, the bank has announced.
The bank says customers with 123 Current Accounts, 123 Lite Current Accounts and Select and Private current accounts will no longer be liable to pay fees if they go into an unarranged overdraft. According to Santander, this will benefit four million of its customers.
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These accounts are all monthly-fee based, though. The bank has not removed unarranged overdraft fees from its free accounts, including its Everyday Current Account and Student range.
The maximum monthly charge that customers in an unarranged overdraft will pay has been nearly halved, from £95 down to £50 and includes all fees for paid and unpaid items.
The Santander Basic Current Account also has no overdraft fees and no monthly account fee.
Santander’s announcement comes in the wake of an FCA report in which the financial watchdog said that overdrafts needed “fundamental reform” due to a lack of transparency.
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Consumer group Which? previously accused the regulator of ‘dragging its heels’ on clamping down on overdraft fees by the banks. The Which? investigation named Santander as having the worst overdraft fees of any high street bank. It found Santander was charging 7.5 times more than a payday loan for overdraft fees – an eye-watering £179 over 30 days.
In response to those findings Santander committed to removing its overdraft fees, which it has now done for some customers.
Reza Attar-Zadeh, head of customer proposition and experience at Santander UK, says: “These changes mean our four million 123, Select and Private current account customers will no longer incur unarranged overdraft fees. For other customers the cap on these fees will be almost halved, ensuring that all our current account customers can benefit from overdraft caps that are among the lowest in the market.”
Victor Trokoudes, chief executive of Plum comments: "We are very pleased to see Santander review their overdraft fees. Plum is a firm believer that fees such as these are often confusing and can result in unexpected fees which is why we campaigned against unexpected fees by producing a tool which highlights them. Our research found that the average user racks up £152 annually in bank fees, £221 if they have at least one overdraft transaction. This is a positive move from Santander to simplify overdraft fees for their customers."
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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