Royal Bank of Scotland and NatWest made the groundbreaking announcement yesterday that they will be slashing their unauthorised borrowing fees.
The move comes despite the fact that the ongoing test case between a number of banks, including NatWest and RBS, and the Office of Fair Trading is still awaiting an appeal decision by the House of Lords.
The bank charge cuts will be effective from October 1, and will see the fee for returning a cheque, direct debit or standing order cut to £5, while the fee for paying an item on an unauthorised overdraft will be cut in half to £15 a day.
Commenting on the announcement, the new CEO of the Group, Brian Hartzer, said: "This is good news for customers, not least because the fees for unarranged borrowing have been an area of ongoing concern for them.
"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."
Consumer group Which? has welcomed the move, chief executive Peter Vicary Smith said: "This is a step in the right direction and a victory for consumer pressure."
However, he goes on to say: "If RBS and NatWest truly want to get back in their customers' good books, they should admit defeat in the bank charges test case and repay the millions of pounds Which? believes they've been unfairly taking from their current account holders for years."
Nevertheless, the move should prompt other lenders to do the same, Louise Bond, personal finance expert at uSwitch.com hopes: "As the first providers to step up to the plate and do the decent thing before the outcome of the test case, we eagerly await the other banks to follow suit," she said.
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