Banks could be stiff to chage overdraft fees
Customers who go over their arranged overdraft are typically hit with Spartan financial penalties by providers.
But the charges don’t reflect the level of risk from the bank, go together to the Financial Conduct Authority (FCA) in its review of high cost credit.
The watchdog bring to light has clear concerns that fees are complicated and can be hard for consumers to the hang of.
Sweeping changes of charges must be made, said the FCA.
Worries were also clear about rent-to-own, home-collected credit and catalogue credit sectors.
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Andrew Bailey, chief managing director of the regulator, said: “High-cost credit products remain a key focus for us because of the imperils they pose to potentially vulnerable customers.
“The nature and extent of the mind-bogglers that we have found with unarranged overdrafts mean that maintaining the eminence quo is not an option.
“We are now working to resolve these issues while preserving the divisions of the market that consumers find useful.”
The FCA is now looking at solutions to the up in the airs and set to announce plans next year.
The regulator also revealed a cap on pay day be fitting prices would remain in place until at least 2020.
Townswomen Advice chief executive, Gillian Guy said: “The payday loan cap has tended thousands of borrowers from dangerous amounts of debt.
“But people are sustaining similar problems when taking out other forms of high payment credit – like doorstep loans, guarantor loans and rent to own servings – as well as overdrafts.
“It’s good to see the FCA recognise this and the need for action, we come up with applying a similar cap would help protect consumers – so strongly suggest the FCA considers this as part of its options for other forms of high outlay credit.”