CONFUSOPOLY or TRANSPARENCY?: UK banks charging as much as 800,000% on overdrafts


For me one of the most telling facts about the “Payday Loans” story is that the Financial Ombudsman receives very few complaints about them yet is swamped by unprecedented numbers of complaints about banking and the wider Financial Services sector!

Calls for regulation of interest rates are understandable and fully justified BUT, across the board. Great quote from Mike Dailly at Govan Law Centre:

“The Romans 2,500 years ago managed to cap lending charges at 8%” 

One thing that strikes me about this aspect of the market is that, at least, the Payday loan companies are TRANSPARENT about equivalent APR which cannot, necessarily, be said of the High Street Banks! Yet it is the banks who talk about customer “relationships” the other is, essentially, transactional. Confusing, isn’t it!?

Banks love to TALK about Customer Charters, helpful service, blah, blah although, families and business in UK have come to realise that such sentiment is restricted to advertising, with precious little evidence…

CONFUSOPOLY AT WORK

Our High Street Banks prefer the tried and tested “institutional method” of making calculation of charges very confusing for their CUSTOMERS. Of course they aren’t alone because this is the approach favoured by Utility companies, Mobile phone companies and the good old BBA, as usual, persist with their attempts to defend the indefensible

A customer borrowing £100 for 28 days without the consent of Santander would repay £200, for example.

That is the equivalent annualised percentage rate, or APR, of 819,100%.

Eric Leenders, from the British Banking Association, said that the industry was willing to look at concerns.

But he said that using APRs to calculate the cost of unauthorised borrowing was a “mathematical manipulation” because the fees are representative of borrowing on an overdraft facility, not for borrowing the specific amount of money.

via BBC News – UK banks charging as much as 800,000% on overdrafts.

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