l r,-i""r,:~-, Ross McEwan Gogarburn Edinburgh 13 July 2016 EH12 1 HQ

Transcription

1 l r,-i""r,:~-, Ross McEan - I\\ -! ' ~ i'..,<!. Chief Executive IIRBS Gogarburn Edinburgh 13 July 2016 EH12 1 HQ Rt Hon Andre Tyrie MP Chairman of the Treasury Select Committee House of Commons Committee Office 7 Millbank London SWlP 3JA Telephone: Direct Line: rbs.com Thank you for your letter of 5 July regarding our Overdraft products. I attach the ansers to the six questions you tabled. Short term borroing is an important need for RBS and NatWest customers. We have simplified both the number of charges and the ay e charge for Overdrafts so customers can be clear hat they are paying. These changes ere made in line ith ongoing discussions and feedback from both regulators and consumer groups. Tools are available on line and in branch, hich allo customers to run scenarios and see hat the cost ould be ere they to borro via an Overdraft or alternative products. We have also invested in infrastructure to arn existing and ne customers of impending charges via SMS and so they can take action to fund their account and avoid any charges. That is no done even more easily for millions of customers via the NatWest/RBS Mobile App hich offers instant account transfers at no cost. Over the past 12 months only 16% of RBS/ NatWest active current account customers have used their Unarranged Overdraft. We have ansered your questions on the basis of all of the on sale personal accounts hich NatWest and RBS offer; other Youth and Basic accounts do not offer an overdraft. Yours sincerely, Ross McEan 1 The Royal Bank of Scotland Group pie Registered in Scotland No Registered Office: 36 St Andre Square Edinburgh EH2 2YB

2 Question 1: What is the daily charge for a customer using an authorised overdraft? RBS and NatWest do not apply a daily charge for using an Arranged Overdraft. RBS and NatWest apply Arranged Overdraft interest and a 6 monthly usage fee. Each of these is explained belo: Arranged overdraft interest Arranged overdraft interest is calculated on the daily overdran balance on the account. Each account has a buffer. If a customer goes overdran by more than their buffer, they ill pay Arranged Overdraft interest on the hole Arranged Overdraft balance. If incurred, interest ill be debited from a customer's account once a month after the end of their charging period. Customers ill receive at least 14 days notice of ho much they ill be charged and hen. Arranged Overdraft Usage Fee 6 per monthly charging period hen the customer uses their Arranged Overdraft by more than their buffer. If incurred, the Arranged Overdraft Usage Fee ill be debited once a month after the end of the customer's charging period. Customers ill receive at least 14 days notice of ho much they ill be charged and hen. Charging period a customer's charging period runs from month to month, usually from the date they opened their account (for example, if the account as opened on 15 August, the charging period ill run from the 15 1 hof each month to the 14th of the next month). The table belo sets out each of the current accounts that RBS and NatWest offer ith an Arranged Overdraft (excluding youth accounts and basic bank accounts hich do not offer an Arranged or Unarranged Overdraft). RBS and NatWest have included the Arranged Overdraft interest rates, hether or not the Arranged Overdraft Usage Fee is charged and hat the customer's buffer is: Account Arranged overdraft interest rate (EAR%) Buffer Arranged Overdraft Usage Fee charged? Select Yes Reard Yes Reard Silver Yes Reard Platinum Yes Reard Black Yes Select Silver Yes Select Platinum (RBS) 250 No (RBS) 1 These current accounts are only on offer in the to-be divested Williams and Glyn business. 2

3 Account Arranged overdraft Buffer Arranged Overdraft interest rate (EAR%) Usage Fee charged? (NatWest) Yes (NatWest) Black No (RBS) Yes (NatWest) Student and Graduate accounts RBS and NatWest also offer a Student Account and a Graduate account hich offer an Arranged Overdraft. Student overdrafts do not incur any fees or interest for using the Arranged Overdraft. Graduate accounts are available for to years. Graduate accounts do not charge the Arranged Overdraft Usage Fee but interest may be charged (9.9% EAR (RBS), 17.81% (NatWest)) if they are overdran beyond 2,000 in the first year on the account and 1,000 in the second year on the account. If the customer does exceed those thresholds they ill be charged Arranged Overdraft interest on the amount of the overdran balance that exceeds those thresholds. Question 2: Is there a cap on the charge incurred by a customer using an authorised overdraft? If so, hat Is the maximum charge that a customer can incur in any eek, month or year? The Arranged Overdraft Usage Fee is a monthly fee so there is a 6 cap per month. Whether or not Arranged interest and the Arranged Overdraft Usage Fee are incurred ill depend on the individual customer's usage of their Arranged Overdraft. There is no cap on Arranged Overdraft interest. Question 3: What is the daily charge for an unauthorised overdraft? RBS and NatWest charge a 6 Unarranged Overdraft Usage Fee for each day there is an Unarranged Overdraft of more than 10 on the customer's account at close of business on that day. All the accounts listed at Question 1 can incur an Unarranged Overdraft Usage Fee ith the exception of the Student account. RBS and NatWest also charge an Unpaid Transaction Fee and more details about this are included in the Appendix to this response. 2 These current accounts are only on offer in the to-be divested Williams and Glyn business. 3 These current accounts are only on offer in the to-be divested Williams and Glyn business. 3

4 Question 4: Is there a cap on the charge incurred by a customer using an unauthorised overdraft? If so. hat is the maximum charge that a customer can incur in any eek. month or year? The Unarranged Overdraft Usage Fee is capped per charging period: Fee Amount Maximum charge Unarranged Overdraft Usage Fee 6 per day for Unarranged Overdraft of more than fees per charging period ( 90) Our charges are calculated and charged per monthly charging period and not on a calendar month basis. A customer could in principle incur the folloing maximum charges in a eek, month or year (but this ould depend on their individual charging period): Fee Maximum eekly charge (7 days) Maximum charge per monthly charge period Maximum annual charge Unarranged Overdraft Usage Fee 42, subject to monthly cap Question 5: Are any other costs incurred by a customer using an unauthorised overdraft, compared to an authorised overdraft - such as additional fees or interest rates? No. atwest do not charge debit interest on the Unarranged element of the balance, the 6 daily fee is the only charge applied. RBS I NatWest ill only charge the 6 Arranged Overdraft Usage Fee on an Arranged position. In the scenario here there is no Arranged Overdraft in place and the customer goes into an Unarranged overdraft, only the Unarranged Overdraft Usage Fee ill apply. Question 6: What action does atwest take - if any- hen a customer enters into an unauthorised overdraft? atwest has introduced a number of technical solutions, processes and communication strategies to protect and support a customer hen they are about to enter or have entered an Unarranged Overdraft. Strategies to help customers avoid or get out of Overdraft position Act No Alerts: Act No alerts are designed to make the customer aare of the actual or potential for an Unarranged Overdraft position - here possible - so that the customer can self correct. In mid-2015 RBS and NatWest auto-enrolled the current account back book into the service, for all customers here mobile or details ere held. Minimum balance alerts: Along ith Act No alerts, RBS and NatWest have also developed additional technical solutions hich are designed to pre-emptively assist current account customers avoid entering an Unarranged Overdraft. In particular, minimum balance alerts are designed as an optional early arning to help customers to take action before becoming overdran and being charged an Unarranged Overdraft Usage Fee. Customers can ensure that these alerts are received by them hen their balance reaches a particular amount (e.g. if near to exceeding their Arranged Overdraft limit). 4

5 Overdraft Control: this is an optional service hich operates ith RBS and NatWest Select Accounts. Overdraft Control helps customers ho ish to avoid Unarranged Overdraft use by providing additional controls to keep accounts ithin Arranged limits. There is no monthly or annual fee associated ith the set up or on-going servicing of the account. Overdraft Control prevents transactions hich request authorisation from being paid that ould otherise have taken the customer into an Unarranged Overdraft. Strategies to help customers hen they are in an Unarranged Overdraft Unarranged overdraft letter - an Unarranged Overdraft fee letter is sent the day after the customer enters into an Unarranged Overdraft of 10 or more as at close of business the previous day. This is sent on the first occurrence in a 90 day period only and includes details on ho the customer can avoid charges in the future through alerts, mobile and online banking and Overdraft Control. Unpaid Transaction letter- an Unpaid Transaction Fee letter is sent out to the customer hen an item is returned. If multiple items are returned unpaid, all items are detailed in the letter. Pre-notification ofinterest and charges letter- this accompanies the account statement and is generated at the end of charging period and is then sent to the customer as a letter or through on line banking, depending on preferences. A minimum of 14 days' notice is provided by the pre notification interest and charges letter before any fees or charges are applied. Communications to customers that ould benefit from an Arranged Overdraft facility RBS and NatWest run communication campaigns targeting customers ho have incurred Unarranged Overdraft charges (or are considered likely to) to notify them of the availability of an Arranged Overdraft (or the opportunity to increase their Arranged limit) to help them avoid the costs associated ith Unarranged Overdrafts. These communications appear to have been ell received by customers. Complaints policies: RBS and NatWest have in place reactive complaints policies that allo for goodill refunds to be made to customers here appropriate. These include those for customers ho have incurred a first time fee, for hom e refund fees here they call us to discuss options to avoid unarranged fees in the future. Pre-emptive financial hardship strategies: RBS and NatWest have a financial difficulty referral team that operate a number of event-based triggers to identify customers ho may be facing financial difficulty, including evidence of regular use of Unarranged borroing. This team reach out to customers to establish if they need help ith managing their finances, and can provide budgeting advice or set up repayment plans that ill help the customer manage their borroing don. In addition to the tools summarised above, atwest offer mobile and online account access to allo customers to closely monitor up to date balances. 5

6 Summary of requested charges including Unpaid fees PCA brands Account name Arranged overdraft Daily fee Monthly fee Debit interest (EAR) Arranged overdraft buffer Unarranged overdraft Daily fee Monthly fee Debit interest {EAR) Unarrange dcap (monthly) Unpaid transact ionfee 4 Unpaid transacti on fee cap (monthly) Paid transacti on fee W&G only W&G only W&G only Select % Reard % Reard Silver Reard Platinum Reard Black Select Silver Select Platinum Black % % % % (RBS) 6(NW) fo(rbs) 6(NW) 19.24%(RB S) 19.89%{N W) % Where the Overdraft Control service is opted for, the Unpaid Transaction Fee is not applied in the event that a debiting transaction is rejected. 6

7 Unpaid Transaction Fee comment RBS and NatWest charge a 6 Unpaid Transaction Fee. An Unpaid Transaction Fee is charged if: The customer instructs us to make a ithdraal or other payment hich cannot be met from the cleared balance in the account or any unused Arranged Overdraft; and The Bank decides not to make the payment and create or increase an Unarranged Overdraft on the customer's account. All the accounts listed at Question 1 can incur an Unpaid Transaction Fee. If incurred, Unarranged Overdraft Usage Fees and Unpaid Transaction Fees ill be debited from a customer's account once a month after the end of their charging period. Customers ill receive at least 14 days notice of ho much they ill be charged and hen. Unpaid fee cap atwest has a cap on Unpaid Transaction Fees per monthly charging period of 10 fees, or 60. 7