Bank customers to escape some 'unpaid item' fees

Image caption Bank customers will no longer have to pay "unpaid" bill fees

Bank customers are be spared penalty fees when they miss a payment, but then top their accounts up later in the same day.

Seven High Street banks have agreed to "retry" payments later in the day, if a customer does not initially have sufficient funds to make a payment.

The move should save customers millions of pounds in charges.

Barclays, HSBC, RBS and Santander are among those who have agreed to abide by the new voluntary accord.

Previously banks made £200m a year from penalty fees on what they called "unpaid items", usually bill payments that were refused because the account had insufficient funds.

In addition, customers could incur penalties from the companies whose bills remained unpaid.

The Financial Conduct Authority (FCA) decided this was unfair because regular deductions, such as direct debits, tended to be removed first thing in the morning without taking into account any new credits and salary payments made later, along with cheques which cleared during the day.

Now banks will operate a retry system in the afternoon, probably between 3pm and 4pm, including any new funds which have arrived before then.

Lloyds Banking Group has also signed up, but while it already gives direct debits another attempt in the afternoon, it leaves unsuccessful standing orders until the next day.

Until systems at Lloyds are updated, a customer who incurs a late payment charge because money has not been properly credited will be able to claim a refund.

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