Customers of the Lloyds TSB Classic current account can now opt to pay a monthly fee for the 'Control' service which will prevent them from going overdrawn.
When a payment tries to come out of an account which would push it into unauthorised lending territory – i.e. into an unauthorised overdraft or over an agreed overdraft limit – the payments will be returned.
Those customers who opt to pay the £10 a month fee for the privilege of enforced financial discipline will have to pay it regardless of whether or not their account attempts to exceed their authorised limit of spending.
They will also have to pay a £15 unplanned overdraft fee, plus an additional £10 for each item that is returned unpaid.
This deviates from solutions to unauthorised lending bank charges
which other providers have come up with, such as Barclays
, which last year introduced the Personal Reserve, whereby payments are honoured even if there are insufficient funds in the account, and the customer has a five day grace period, in which time they can exceed their authorised overdraft by an agreed amount in return for a fee of £22.
In response to criticism from the Office of Fair Trading
and consumer rights groups concerning charges imposed on current accounts
, the banks have tried in recent years to find alternative solutions to the traditional bank charges, which impose a fee each time for unauthorised borrowing, and the fees can build up if the account is not brought back within its lending limit.
In addition to not allowing the payments to go through, the Lloyds TSB
Control option also includes a text service and mobile banking so that customers can check their account wherever they are, which would usually cost £2.50 a month, and there are no longer any daily unplanned overdraft fees.
Andrew Hagger of Moneynet.co.uk said of the account that "whilst control may cut down on the unauthorised borrowing fees charged under the standard tariff, you are needlessly shelling out £120 per year that you could easily avoid with a bit of simple budgeting and ten minutes or so each week just keeping an eye on your account."
Instead, he says that "by applying for an ‘in case of need’ overdraft facility, you can give yourself some breathing space in case you slip up with your maths or your pay gets delayed."
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