The Financial Conduct Authority (FCA) has today announced that it will undertake work on arranged and unarranged overdrafts as part of a series of measures to improve competition in the current account market.
This follows recommendations proposed by the Competition and Markets Authority (CMA) as part of its investigation into retail banking.
Citizens Advice Chief Executive, Gillian Guy, said:
“Overdraft charges can quickly add up to unmanageable debt.
“An unplanned expense that pushes someone into their overdraft by just a few pounds can lead to them being trapped in a cycle of daily charges. We helped people with 52,000 overdraft debt problems in the last year - in some cases people are paying more in overdraft charges than they would for a payday loan.
“It is good that the FCA has recognised more needs to be done to stop people getting into spirals of debt from unauthorised overdraft fees. Forcing banks to be transparent about these fees would be a step in the right direction, but it's important that the FCA now carefully considers how it could prevent banks from applying unreasonably high charges.”
View report: FCA acts to improve competition in the current account market