Scottish banks are among the biggest offenders when it comes to charging “rip-off overdraft fees”, according to new research.

A Which? study of 16 high street banks that examined the cost of borrowing £100 for 30 days in an unarranged current account overdraft found that with RBS it would cost £144 – six times higher than a pay-day loan.

Clydesdale Bank’s fee was five times higher at £120, ranking the company alongside Smile, Co-operative Bank and Yorkshire Bank.


However, the consumer group said Bank of Scotland and the Lloyds Banking Group had the lowest charge at just £4.20.

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Santander came out as the most expensive of all the banks surveyed, charging £179 over 30 days.

The new findings follow criticism of high fees by consumer groups and the Competition and Markets Authority (CMA).

Researchers at Which? said they were “concerned” that, despite scrutiny from the regulator, “not enough has been done to protect consumers”.


Gareth Shaw, Which? money expert, said: “It’s alarming that the majority of banks are still allowed to charge more than pay-day loan firms through these rip-off overdraft fees. These extortionate fees can cost thousands of pounds a year, hitting those who can afford it the least.

“The regulator cannot drag its heels any longer. We must see urgent action to restrict these charges, bringing them into line with arranged overdraft fees to finally end this unfair practice.”

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Which? says it has the support of 84 MPs from all the main parties for its demand that the Financial Conduct Authority (FCA) takes “urgent action to end this unfair practice” by restricting unarranged overdraft charges to the same level as arranged overdrafts.

Which? compared bank fees with the £24 cost of a pay-day loan under an existing FCA-imposed cap.

Last year, RBS lowered its monthly maximum charge for unauthorised overdrafts from £150 to £80 but it upped the daily charge and the per item charge from £6 to £8.

It also reduced the number of fees it will charge over a set period.

As part of its inquiry into current accounts, the CMA said in 2016 that banks should introduce a maximum monthly charge by the end of September 2017.

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An RBS spokesman said: “Pay-day loans are an arranged form of lending and are not directly comparable to unarranged overdraft costs.

“We encourage customers to consider arranged borrowing where the costs are considerably less – in this scenario they would be less than £14. Customers receive an alert before they reach unarranged borrowing and over 30 days would receive two further reminders to speak to us about arranged borrowing or to switch unarranged borrowing off.”

Clydesdale Bank declined to comment.

A spokesman for industry body UK Finance said banks wanted to assist their customers.

“The industry is committed to helping customers with their everyday banking and an overdraft can be a short-term solution to smooth cashflow,” he said.

“An unarranged overdraft might arise where customers have miscalculated their finances, although we would always encourage them to contact their bank to arrange an overdraft and minimise costs. Text alerts can help customers take action if they are going overdrawn and lenders are working on a series of measures to help those who regularly use their overdraft.”