Regulator Takes Aim at Unarranged Overdraft Charges
July 31, 2017
The Financial Conduct Authority (FCA) has said it will work to change the underlying dynamics that result in many thousands of Brits suffering financially as a result of excessive unarranged overdraft charges.
Charges levied for use of bank account overdrafts without prior permission tend to be very high and are recognised as being a major source of problems for millions of indebted consumers throughout the UK.
The FCA, which is responsible for regulating the entire financial services industry, is now taking aim at these charges as a key area of focus as it continues its efforts to restrict practices that cause serious difficulties for indebted Brits.
“The nature and extent of the problems that we have found with unarranged overdrafts mean that maintaining the status quo is not an option,” said the FCA’s chief executive Andrew Bailey in a statement.
Mr Bailey also said that there is “clear evidence of improvement” in the context of the payday lending sector, where the FCA has been clamping down on excessive charges and fees in recent years.
The regulator has published a review of high-cost credit markets across the country and reported that its tightening of rules in the payday lending sector saves roughly 760,000 consumers a collective total of £150 on an annual basis.
“We are pleased to see clear evidence of improvement in the payday lending market after a period when firms’ treatment of customers and their business models were often unacceptable,” said Bailey from the FCA.
“However, there is more that we can do, and this review is about identifying the areas where consumers may be suffering harm so that we can focus our efforts accordingly.”
In addition to charges linked to unarranged overdraft use, the FCA has said it intends to keep a close eye on developments within the motor finance sector as it continues to scrutinise all areas of the economy in which high cost credit deals are available.
Other areas of potential concern for the regulator are cited as being the rent-to-own, the home-collected credit and the catalogue credit sectors.
If you live anywhere in Scotland and you’re struggling to maintain control of your debts then Scotland Debt Solutions can help. Contact your nearest SDS office to arrange a free consultation.
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