.BARCLAYS
Chief Executive Office
Barclays UK
Level26
One Churchill Place
Canary Wharf
London
E14 SHP
www.barclays.com
29 July 2016
The Rt Hon Andrew Tyrie MP
Chairman, Treasury Select Committee
Committee Office
House of Commons
14 Tothill Street
London
SWlH 9NB
Thank you for your letter dated 5 July regarding overdraft fees in light of the CMA's recent analysis of the
market. As CEO of the newly created Barclays UK, which will become Barclays' ring-fenced bank, I am
pleased to share the information that you requested .
Overdraft pricing and financial management are important consumer concerns and Barclays has taken
significant steps over the past few years to provide greater transpa rency, simplicity and control for
customers. I am proud of this work, and believe it has delivered real benefits for our customers who
choose to use an overdraft facility with us.
In June 2014, Barclays implemented significant changes to our personal banking overdraft structure and
charges to introduce a simple daily fee structure that replaced the previous APR model. This was based on
detailed customer research which told us that they find daily fees simpler and easier to understand, and
the changes were welcomed by Citizen's Advice when announced.
Our prices are detailed in full in the enclosed appendix, and in summary as follows:
£0.75 per day for overdrafts up to £1,000
£1.50 per day for overdrafts from £1,000 and up to £2,000
£3.00 per day for overdrafts exceeding £2,000
Emergency Borrowing (this is an agreed amount beyond a customer's usual overdraft which is made
available to them on a transparent, opt-in basis to help with unexpected expenditure). Emergency
Borrowing is charged at £5 per day, capped at £35 per statement month. Barclays does not offer
unarranged overdrafts.
It is worth noting that of our customers that do have an overdraft limit, more than half of those are
generally in credit, and will not incur any fees.
Where items are unpaid due to insufficient funds, an £8 unpaid transaction fee (capped at one per day) is
applied. This is not a fee for borrowing- it covers the cost of identifying and managing that unpaid
payment. Where applied, unpaid transaction fees replace any daily fee - they are not levied in addition to
borrowing charges.
Barclays Bank PLC is autho11sed by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulat,on Authority (Financial Serv,ces
Register number: 122702). Registered in England. Registered No. 1026167. Registered Off,ce: 1 Churchill Place, London E14 5HP.
For customers not able to open a regular current account (e.g. due to past financial difficulties), we offer
the Barclays Basic Current Account which, in line with the 2014 Memorandum of Understanding with HM
Treasury, is fee-free (including the removal of unpaid transaction fees) and does not allow customers to
borrow.
Further to the introduction of daily fees, in June 2014 we also introduced a suite of other changes to
improve transparency and support customers in managing their finances:
Extended daily 'grace period': This gives customers more time on the day a payment is due to make funds
available. Customers are proactively alerted via SMS to the level of funds in their account and have until
3pm to pay money into their account to avoid unpaid transaction fees, and until 6.30pm to avoid overdraft
and Emergency Borrowing fees. The earlier timing reflects the sequence of payment processing cycles.
Introduced £15 'buffer zones': In response to feedback from consumer groups, this was introduced to help
customers who accidently go overdrawn by a small amount. This means that a payment that takes a
customer to -£15 would be processed with no charge applied. The buffer applies at every 'tier' (overdraft,
Emergency Borrowing and unpaid transaction).
Introduced a range of free SMS alerts with triggers: These alert customers when they are about to move
into a higher tier of overdraft borrowing, and warn them before they incur charges so that they can take
action (see Appendix for the full list).
We have found the SMS alerts to be a particularly powerful tool in helping customers to manage their
finances. We took the proactive decision to auto-register customers into certain alerts and have been
pleased to see almost half of customers taking action in response to these alerts. We send out over
250,000 alerts per day, and our recent research into customer alerts (January 2016) shows that customers
appreciate the alerts they receive. We believe this service offers real transparency and control for
customers, and supports recent research from the FCA which finds that providing timely, relevant, 'bite
size' information is most effective in helping customers manage their finances.
Finally, for customers experiencing financial difficulty we have a dedicated and specifically trained team
within the business to support them. Our Financial Assistance Service covers all channels (including online
support at www.barclays.co.uk/moneymanagement) to give access to information, tools and support,
including 3rd parties such as Step Change, and Citizens Advice.
Full answers to each of your detailed questions are appended . I hope this provides everything you need ­
if you have any further questions please do not hesitate to get in touch.
Yours sincerely
Ashok Vaswani
CEO, Barclays UK
Barclays Bank PLC Is authorised by the Prudential Regulatlon Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Servkes
Register number: 122702). Registered in England. Registered No. 1026167. Registered Office: 1 Churchill Place, London EH SHP.
Appendix: Full response to questions
1. What is the daily charge for a customer using an authorised overdraft?
·-·r; ,.;""~.. .
~
Overdraft charges
Up to £1,000 - 75p a day
How much you're charged when
you use your overdraft
Over £1,000 and up to £2,000 - £1.50 a day
Emergency Borrowing
£5 a day
An agreed amount if you
exceed your overdraft limit
You only pay for the days you use the extra borrowing and the monthly
cost has been capped at £35. If a customer remains in their Emergency
Borrowing after 7 days, they will be charged the agreed Overdraft daily
fee for the rest of the monthly charging period
Over £2,000 - £3.00 a day
Unpaid Transaction fee
When a customer reaches the
end of their agreed borrowing
and an arranged item is
unpaid due to insufficient
funds.
£8- capped at one per day
This is not a fee for borrowing - it covers the cost of identifying and
managing that unpaid payment. Where applied, unpaid transaction fees
replace the daily fee (they are not additive).
Only one fee per day is charged - the highest of the fee generated.
Examples: If your overdraft limit is £1,000 and your Emergency Borrowing is £50, you would only be
charged £5 were you to dip into your Emergency Borrowing by more than the permitted £15 buffer.
You would not be charged £5 + 75p.
Similarly, if you were in your Emergency Borrowing and incurred an unpaid transaction fee, you would
only be charged £8 that day. You would not be charged £8 + £5 + 75p.
We offer a reduced daily fee structure for customers on a Student, Graduate and Higher Education
Account:
• Up to £1,000 - 25p/day .
• Over £1,000 - 50p/day
• Over £2,000 - £1/day
Overdrafts over £15,000 have a set-up fee of 1.5% of the arranged overdraft limit and a renewal fee of
1.5% of the lim it will also be applied annually. These fees are in addition to the daily overdraft fees.
Some customers with additional paid-for current account add-ons (such as our Tech Pack that insures
gadgets and mobile phones) will not be charged when using their overdraft up to £200 .
2. Is there a cap on the charge incurred by a customer using an authorised overdraft? If so, what is the
maximum charge that a customer can incur in any week, month or year?
With the exception of Emergency Borrowing, we do not cap these fees. Therefore, the most a customer
could pay for each would be:
Max. cost for a week
(7 days)
£5.25
Up to 1,000
£10.50
Upto £2,000
£21.00
Over£2,000
£35.00
Emergency Borrowing
*this is capped at this level per statement month
Max. cost for a month
(assuming full 31 days)
£23.25
£46.50
£93 .00
£35.00*
Max. cost for a year
(365 days)
£273.75
£547.50
£1,095.00
£420.00
However, in practice it is very unusual for a customer to incur a full month of fees, let alone a full year of
fees. Barclays also proactively monitors customer accounts for evidence of behaviour which may indicate
changing circumstances of financial difficulty, and will reach out to a customer either by letter, phone or
using a text alert (see 'Financial Assistance Alert', below) to offer support. Specific triggers we use for this
outreach include:
• Customers who have incurred 4 or more unpaid in a charging month
Been in a chargeable overdraft for 75 days in a 90 day period
•
• 25 days in Emergency borrowing in a charging month
We partner with a number of different debt charities that can also help in these scenarios.
3. What is the daily charge for an unauthorised overdraft?
4. Is there a cap on the charge incurred by a customer using an unauthorised overdraft? If so, what is
the maximum charge that a customer can incur in any week, month or year?
5. Are any other costs incurred by a customer using an unauthorised overdraft, compared to an
authorised overdraft - such as additional fees or interest rates?
We don't provide unarranged overdrafts or any other form of unarranged borrowing facility.
6. What action does Barclays take - if any - when a customer enters into an unauthorised overdraft?
We don't provide unarranged overdrafts or any other form of unarranged borrowing facility.
We do however offer customers the ability to sign up to a suite of text alerts to flag to them when they are
about to enter into a different tier of borrowing, or incur a fee. A full list of these alerts is below - since
their introduction we have seen a positive customer response, with customers paying in to their accounts
at key moments to avoid fees.
-
~
Low Balance
Overdraft Tier 1, 2 and 3
Exiting Overdraft Limit
Exiting Overdraft Limit ­
ERA limit - Pilot
Avoid Emergency
Borrowing 1
Emergency Borrowing 2
Avoid Unpaid
Transaction Fee
·z~
Your balance is now [BALANCE] on account [ACCOUNT NAME]. You
can check your transactions by mobile, online, telephone or visit us in
branch.
Your account [ACCOUNT NAME] is overdrawn. To avoid possible
overdraft fees of 75p per day, please transfer sufficient funds today by
18.30
Your account [ACCOUNT NAME] is approaching your overdraft limit.
To avoid fees please transfer sufficient funds today by 18:30.
barclays.co.uk/understandfees
Your account [ACCOUNT NAME] is approaching your overdraft limit.
To avoid fees transfer sufficient funds by 18.30. There are a number of
options available to you including extending your overdraft (subject to
status), log into Barclays Mobile Banking
Your account [ACCOUNT NAME] is in Emergency Borrowing. To avoid
a fee of £5 per day please transfer sufficient funds today by 18:30.
barclays.co.uk/understandfees
Your account [ACCOUNT NAME] has incurred the maximum £35
charge for Emergency Borrowing in this charging period . Other fees
may apply. barclays.co.uk/understandfees
Your account [ACCOUNT NAME] has insufficient funds for requested
payments. To ensure payments are made and avoid an £8 fee,
transfer [AMOUNT] today by 15:00
Barclays Bank PLC is authonsed by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential ~egulation Authority (Financial Services
Reg,ster number: 122702). Registered In England. Registered No. 1026167. Registered Offke: 1 Churchill Place, London El 4 SHP.
Avoid Unpaid
Transaction Fee (2 way
PnP)
Avoid Unpaid
Transaction Fee (2 way
PnP)- FAILURE to auto
transfer
Overlimit due to Paid
Item
Financial Assistance Alert
Entering - Fee Free limit
Exiting - Fee Free limit
Your account ending XXXX has insufficient funds for requested
payments. You'll soon receive another SMS from us that you can reply
to (at no cost to you).
Sorry, we were unable to move funds on your behalf. Please check
your balance by mobile, online or at any ATM.
Your account [ACCOUNT NAME] has exceeded your limits. Transfer
sufficient funds as future payments may not be made and fees may
apply. barclays.co.uk/understandfees
We can see you pay regular borrowing fees. If you need our help or
support with your finances, talk to us or visit
barclays.co.uk/moneymanagement
Your balance is now [BALANCE] on account [ACCOUNT NAME]. You
are within your fee free limit and no overdraft charges will apply
unless you exceed this limit
Your account [ACCOUNT NAME] is approaching your fee free
overdraft limit. To avoid possible fees please transfer sufficient funds
today by 18.30