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Lloyds TSB has written to up to six million customers who have a Classic current account warning them that a penalty of 30 will be triggered if they go even a penny overdrawn. Previously customers were allowed a 10 buffer zone before the penalty was triggered. A charge of 35 will apply every time a cheque or direct debit is bounced.
The OFT, told Money Box last month "Banks are entitled to charge what it costs them when somebody defaults, and that would be limited to certain administrative costs but they're not allowed to profit from those default charges." But when asked this week if the 35 charge for bouncing a payment was what it actually cost the bank, Gerrard Schmid, Head of Transactional Banking at Lloyds TSB, refused to answer.
Asked if it reflected the costs 'yes or no' he sat in silence and the interview came to an end.
The theory is that they are raising money now in anticipation that the oft will make them reduce charges in the new year.
The silence when asked the question says it all i think.