The Financial Conduct Authority (FCA) has secured a committment from a number of high street banks to “retry payments” in a move that could save UK banking customers millions.
Typically banks process payments such as direct debits and standing orders early in the morning and if the customer has not yet topped up their account at this point, or they have but the payment has not had time to clear, they could potentially face a penalty charge.
Failing to have sufficient funds to meet the cost of payments such as direct debits and standing orders is estimated to cost UK banking customers in the region of £200 million per year in penalty fees.
Under the new measures if funds were not in place at the first attempt, banks who have committed to the retry process will retry the payment later in the day before imposing a unpaid item fee.
The banks who have adopted the new approach are The Co-operative, HSBC, Nationwide, Barclays, RBS Group, National Australia Group and Santander.
Lloyds Banking Group has also agreed to implement the new approach, but while it already has a retry process on many transactions, needs to update its system to include other payments. The statement from the FCA said: "Until this occurs customers will be able to claim a refund for related late payment charges."
Clive Adamson, the FCA’s director of supervision, commented:
“It is little things like this that have a big impact on customers’ everyday banking experience, even though many people won’t be familiar with the process. This is a small adjustment, but one that will make a big difference.
“We are committed to putting customer interests at the heart of everything the FCA does, and it's encouraging that the banks are also beginning to take this approach. There are no new rules here – this is an agreement with the industry; working together for the benefit of consumers can often be more effective than writing new rules, and it certainly delivers results more quickly.
Adam Phillips, Consumer Panel Chair at the FCA said:
"We wholeheartedly welcome this initiative by the FCA. In these difficult economic times this measure will particularly benefit those that most need it.
We hope that the banking industry will continue to work with the FCA on initiatives that put treating consumers fairly at the heart of their business models."