Good news for debt management as bank slashes fees

Debt management industry chiefs welcomed news that bank charges could be on the way down, at least for some of their clients.

The RBS-NatWest banking group, now majority owned by the UK taxpayer, has announced that it plans to reduce overdraft charges. The decision comes ahead of a much awaited decision from the Supreme Court regarding the regulation of bank charges by the Office of fair trading (OFT).

The cost of a bounced cheque will be slashed from £38 down to just £5, and will come into force on 1^st October this year. This represents a fee reduction of nearly 87%. The charge for paying an item on an account that is overdrawn will fall by 50%, from £30 to just £15.

Brian Hartzer, the head of UK retail banking was upbeat about the announcement, believing that it was good news for consumers, particularly because “fees for unarranged borrowing have been an area of ongoing concern”.

“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.

“As it relates to past charges we are awaiting the outcome of the industry-wide bank charges test case,” added Mr Hartzer.

The news that RBS NatWest is reducing fees could well prompt similar moves from the other large UK banks. Debt advice specialists believe that this could help to relieve the pressure on many over indebted consumers, which have found themselves in financial difficulty in the wake of the credit crunch.

Record levels of personal debt have resulted in more people in need of debt help programmes such as an IVA, and any reduction in fees and charges could help these hard up individuals in their quest to become debt free.

Fees & Information

We cannot guarantee a reduction in interest or charges. If an IVA is not maintained it could lead to bankruptcy. Whilst initial debt advice is free, fees will be charged if a solution is taken out.

Fees related to Debt Management Plans are in two parts;

"Initial Fee" means your first two "Monthly Payments", which is paid by You to "Us". This represents our fee for establishing your arrangement, and therefore is not distributed to your creditors, and can be paid in two separate instalments. Retention of this fee will put you into further arrears.

"Monthly Fee" means the Fee payable for our Services each month. This is an amount equal to 17.5% of your "Monthly Payment" (apart from your first two "Monthly Payments" which is the "Initial Fee"), subject to a minimum payment of £30 for disposable incomes of 0 - £100, and £35 for disposable incomes of £100.01 - £200.

Fees incurred for Individual Voluntary Arrangements are variable dependent upon the monthly contribution to the arrangement and the agreement that is reached with your creditors. Fees are made up of Nominees fees relating to assistance given to prepare your proposal and Supervisor fees which relate to the ongoing monitoring of your IVA. Fees are already included as part of your monthly contribution. The level of fees and the method of payment are both agreed by your creditors at the outset of the arrangement.

A record of your agreement with us will be held on your credit file for up to six years, and your ability to obtain credit in future may be affected.

You are provided a cooling off period of fourteen days from the date the agreement was deemed to commence, during which you may cancel our agreement. Should you give notice to us that you would like a refund of a payment, or payments, (being other than the initial fee) then where no distributions have, at that time, been made by us, or are in the process or course of being made by us, in respect of that payment or payments this will be made in full (i.e. without deduction of our fee of 17.5%).