RBS moves to cut overdraft charge in half

ROYAL Bank of Scotland has broken ranks with competitors by slashing charges on customers who go overdrawn without agreement or exceed their overdraft limit.<br /><br />From 1 October, RBS and subsidiary NatWest will slash the fee for returning a cheque, direct debit or standing order to &pound;5, while the fee for paying an item on an overdrawn account will be cut by half to &pound;15 per day.<br /><br />Brian Hartzer, the new chief executive of the bank&rsquo;s UK retail division, said: &ldquo;This is good news for customers, not least because the fees for unarranged borrowing have been an area of ongoing concern for them.&rdquo;<br /><br />&ldquo;As we look ahead there are many issues to consider, but we thought it was time to move this particular customer concern forward by cutting our charges.&rdquo;<br /><br />Hartzer, who joined RBS from Australia and New Zealand Banking Group earlier this year, is understood to have been the driving force behind the decision.<br /><br />The move comes as rivals such as Barclays and Lloyds Banking Group fight a test case against the Office of Fair Trading to determine whether banking overdraft charges can be deemed unfair.<br /><br />Banks refunded around &pound;784m to more than 350,000 disgruntled customers in 2007, but have since frozen payments to a further 1.2m while they await the outcome of the legal dispute.<br /><br />The banks lost their case in the High Court and Appeal Court, but have taken the battle to the House of Lords, whose decision will be applied via the new Supreme Court.<br /><br />Banks earn about &pound;2bn a year from fees charged on overdrafts, a practice which has been criticised due to the level of taxpayer support for the industry.<br />