Which ?, a UK-based consumer group and a multi-stakeholder group of 84 MPs are taking over bank overdraft fees, demanding that the Financial Conduct Authority (FCA) require banks to charge the same rates for overdrafts not arranged only for arranged overdrafts. . According to Which ?, the rates charged by banks in some cases are up to seven times higher than the fees charged on payday loans in the UK.
Which? looked at the cost of borrowing £ 100 for 30 days at 16 traditional banks and found that in 13 out of 16 cases it was more expensive than using a payday loan company.
Santander turned out to be the most expensive overdraft – £ 179 – seven times more than the £ 24 maximum charged by a payday loan company because of the caps imposed by the FCA.
Santander has said it will remove the overdraft charge for its paid current accounts from July.
But Santandar was not alone; TSB, HSBC, First Direct, Royal Bank of Scotland and NatWest all applied rates on unallocated overdrafts that were six times or more.
Lloyds Banking Group came out with the lowest fee of £ 4.20 as the bank had already gotten rid of the unpaid overdrafts.
“It is alarming that the majority of banks are still allowed to charge more than payday loan companies for these fraudulent overdraft fees. These exorbitant fees can cost thousands of pounds a year, hitting those who can least afford it, ”Gareth Shaw of Which? said to Financial Time.
The FCA had already committed to reviewing overdraft fees as part of an upcoming report on high-cost credit.
The regulator said it was considering “fundamental reform” in overdraft fees.