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Campaigns | Better banks

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Update

Calling for a crackdown on overdraft charges

9th July

New Which? research finds that charges applied to unarranged overdrafts can cost more than those applied to payday loans.

When we compared the cost of borrowing £100 over 28 days we found some high street banks were charging as much as £90, fees which can be up to four times higher than the maximum allowed charge of £22.40 on a payday loan.

Excessive fees

Back in January 2015, the Financial Conduct Authority introduced a cap on high cost short-term credit to limit excessive fees charged by payday loan companies. However, our research has revealed that overdraft charges can be much more costly.

Our Director of Policy and Campaigns, Alex Neill, said:

‘People with a shortfall in their finances can face much higher charges from some of the big high street banks than they would from payday loan companies.

‘The regulator has shown it’s prepared to take tough action to stamp out unscrupulous practices in the payday loans market, and must now tackle punitive unarranged overdraft charges that cause significant harm to some of the most vulnerable customers.’

Following its review of retail banking in the UK, the Competition and Markets Authority (CMA) has published its provisional remedies to tackle overdraft charges. The remedies include a requirement for banks to have a monthly maximum charge for unarranged overdraft usage.

However, we’re not convinced that this will make much of a difference. Banks typically already put caps on charges and the CMA’s remedies do not address the overall level of fees.

Action on overdraft charges

Alongside our near 50,000 supporters who’ve backed our campaign for Better Banks, we’re calling for unarranged overdraft charges to be set at the same level as arranged overdraft charges.

We’re also calling on the FCA to review overdraft charges in the context of other forms of credit and crackdown on punitive fees.

Join our call for a crackdown on unfair overdraft charges by signing our petition today.

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Update

Join our call for better banks

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8th September 08 Sep
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Take action

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