Part-nationalised Royal Bank of Scotland said today it was slashing overdraft fees on its 12.5 million current accounts from next month.
The move comes weeks after the NatWest owner faced criticism from consumer group Which? for levying fees nearly eight times larger than some rivals - although RBS called the research “misleading”.
The bank – 70% owned by the British state – is cutting fees for returning “bounced” cheques and standing orders from £38 to £5, while fees for paying for goods while overdrawn have been halved from £30 to £15.
Brian Hartzer, the new chief executive of RBS’s retail bank, said the lower fees had been brought forward in response to customer concerns.
“This is good news for customers, not least because the fees for unarranged borrowing have been an area of ongoing concern for them,” he said.
RBS has also cut its monthly maintenance charges for unauthorised overdrafts from £28 to £20, with guaranteed card payment fees down from £35 to £15.
The bank said the vast majority of its customers did not exceed limits but urged customers to avoid fees by arranging borrowing in advance or keeping charges pegged to £5 in return for a monthly fee of £10.
While the new charges apply from next month, the bank – along with seven others - is awaiting the outcome of a test case on legal actions brought against its previous charges.
In 2007 RBS refunded £119 million in overdraft fees to the customers which appealed against the claims, but the banks have since frozen the actions to seek legal clarity on the issue following an agreement with the Financial Services Authority.
The action is currently being considered by the House of Lords, while a parallel investigation into the charges by the Office of Fair Trading is unlikely to be completed before next year.