LLoyds TSB has become the first UK bank to cut their charges for unauthorised overdrafts in the ever-growing revolt regarding bank charges. The bank is facing a test case regarding bank charges next year, but has already revised their fee structure due to be implemented in November.

LLoyds TSB claim the drop in fees is due to customer feedback, and nothing to do with pre-empting the court case next year. However, there moves are very sensible, and will be welcomed as a step in the right direction. They are cutting interest rates for unauthorised overdrafts to £15 per month from £30 per month, with between £6 and £20 a day based on the overdraft amount. The charge for bouncing a cheque, standing order, or direct debit is also going down from £35 to £20.

The bit that I really like is that they are setting up SMS service that will notify customers if they are within £50 of their overdraft limit, or they have gone over it. They then have until 3.30pm that day to resolve the issue if they are overdrawn before they are charged interest.

The Consumer Action Group (CAG) are still not happy, and still think the bank is overcharging however. I think they are overcharging too, but its a step in the right direction. As long as they follow with another step, then they are doing the right thing. My gut feeling is that they will not follow up with another change unless ordered to by the courts.