New Rules Could Limit Scale of Bank Overdraft Charges
April 24, 2017
A new set of rules soon to come before the UK parliament could see banks forced to limit the scale of their overdraft charges.
The Labour MP Rachel Reeves is intending to present a bill before parliament on Tuesday April 25th that will give regulators at the Financial Conduct Authority (FCA) powers to limit the scale of overdraft fees.
Hopes are that the move will result in greater protections for the many tens of thousands of consumers throughout the UK who find their debt problems being made worse by charges linked to unauthorised overdraft use.
A precedent for such a move by regulators has already been set with the FCA having clamped down on payday lenders in recent years and legally limited the scale of their non-repayment charges.
The FCA has also recently made clear that it intends to further scrutinise the ways in which indebted people are being treated and handled by credit providers of all kinds, with the UK’s overall consumer debt burden currently rising consistently on a month by month basis.
Issues relating to overdraft fees and charges are now very much on the FCA’s agenda as it probes the industry, with Ms Reeves keen to see the regulator take strong action to protect vulnerable debtors from high overdraft charges.
“Banks are sending many people deeper into debt with extortionate charges on unauthorised overdrafts,” she told the Guardian.
“They should have a responsibility to help people out of debt, rather than adding to their problems with rip-off charges.”
In 2015, the FCA took action against companies operating with the payday lending industry and limited the scale of charges they could levy against their customers to 0.8 per cent of amounts initially borrowed.
These rule changes are widely regarded as having had a very significant impact on limiting the damage that payday loan companies can do to the finances of indebted individuals and households throughout the UK.
If you live anywhere in Scotland and you are struggling to cope with your personal debt problems then Scotland Debt Solutions can help. Contact any of our offices today to arrange a free and confidential consultation.