The Office of Fair Trading is pushing for banks to give customers the chance to opt out of unauthorised overdrafts. Instead of consumers being able to buy items without the funds in their account, this making use of unauthorized overdraft facilities, the payment would automatically be stopped.
HSBC recently became the first bank to adopt the stance favoured by the OFT, introducing a bank account that comes with a strict overdraft limit; one that customers cannot exceed unless formally applying to have their limit increased.
Unauthorised overdrafts can cause problems with many people, as it can cause them to rack up debt in ‘arrangement’ fees. Often, customers don’t even realise they are exceeding their limit, assuming that they have enough funds to make a purchase because payment has cleared.