Monday, 31 July 2017

Ban on unarranged overdraft charges considered by Financial Conduct Authority



Charges for unarranged bank overdrafts could be banned, under one option being considered by the Financial Conduct Authority (FCA).

 
It said the charges for those who go into the red without agreement can be high and complex.


Earlier this month, the UK's largest lender, Lloyds, said it was getting rid of unarranged overdraft fees altogether from November.


Barclays has already stopped all unauthorised lending.


However, other banks charge about £6 a day, or up to £90 a month.
"We believe there is a case to consider fundamental reform of unarranged overdrafts, and whether they should have a place in any modern banking market," the FCA said, in its review into the high-cost credit market.


"Maintaining the status quo is not an option," said FCA chief executive Andrew Bailey. Unarranged overdraft fees were often "significantly higher" than payday loans, he added.


However, the FCA made it clear that an outright ban on unarranged overdrafts was only one option being considered.


It could impose a cap on charges, or demand some affordability checks before a bank lends money on an unplanned basis.


A year ago the Competition and Markets Authority (CMA) decided against a cap on charges.


The banking industry responded by saying that customers were usually warned if they were about to go overdrawn, usually via a text alert on a mobile app.


"When used sustainably, consumer credit is important for economic growth, and lenders work hard to ensure the balance is right between helping customers to borrow while ensuring longer term affordability," said Eric Leenders, head of personal banking at UK Finance.




BBC    News.