Many of HSBC’s more debt-carrying customers were given cause for celebration this month with the announcement that the bank and its online counterpart, firstdirect, will no longer charge penalty fees on transactions that cannot be completed due to a lack of funds.
Previously, the standard system of fees included no charge on the smallest transactions, £10 charged on declined transactions valued at £10-25, and a fixed £25 fee on transactions worth more than £25 in themselves.
As of November 24th 2013, nine million personal current accountholders with HSBC and firstdirect – including customers with Current Account, HSBC Student, Graduate Account, Bank Account, and HSBC Advance – will pay no fee if a transaction is declined due to them being at their overdraft limit.
The move puts extra power in the hands of accountholders who, other than the inconvenience of having their purchase declined, now have no real incentive to ensure sufficient funds are in their account before trying to buy goods and services.
Brendan Cook, head of retail banking and wealth management at HSBC UK, said: “Removing the fee for unpaid transactions is the start of further improvements to our overdraft service.
“We are listening to our customers so the changes will make our service simpler and better reflect their needs.”
The move demonstrates that at least some of the major financial service providers are still committed to providing UK accountholders with access to free personal banking – something some economists predicted would disappear in the wake of the recent global recession.
However, when the extent of that means no penalties for trying to pay for goods and services with an account that contains insufficient funds, those trying to act as a supplier to these accountholders may not welcome the move.