Block payments to halt unauthorised overdrafts

Almost half of current account holders say they would prefer payments that would carry them into an unauthorised overdraft to be blocked, shows new research by Which?

Preference for whether payments are honoured or not varies across age groups with over three fifths (64%) of 16-24 year olds saying they would prefer their bank to block payments while just under two fifths (38%) of over 45s would want to be prevented for going beyond their limit.

The research comes after the Supreme Court ruled last Wednesday that the Office of Fair Trading (OFT) cannot assess whether unauthorised overdraft charges are fair or not.

Throughout the bank charges saga, banks have argued that unauthorised overdraft charges are payments for a service. Which? is now calling on current account providers to make unauthorised overdrafts an optional service.

Which? has also called for changes to Unfair Terms in Consumer Contract Regulations - the subject of the test case - so that bank charges will have to be fair in the future.

Which? personal finance campaigner, Phil Jones, says: "Different people use their current accounts in different ways so banks shouldn't adopt a one size fits all approach to overdraft charges.

"Many current account holders are effectively being lent money that they haven't asked for and being charged through the nose for it. Such an expensive ‘service' shouldn't be forced on people who don't want it as it can easily lead to financial difficulty.

"We want banks to show they're willing to respond to what their customers want by only making unauthorised overdrafts available to those who ask for them."