Plan to cap unarranged overdraft fees

Jessica TranterLast Update : Tuesday 17 May 2016 - 9:22 AM
Plan to cap unarranged overdraft fees

Bank charges: Regulator proposes cap on unarranged overdraft fees

Close up of hand removing £10 from ATMImage copyright PA

Banks should cap monthly overdraft fees and warn customers if they are about to go overdrawn, the regulator has said.

The Competition and Markets Authority says this and other measures could save bank customers £1bn over five years.

The CMA’s final report into personal and business banking says competition is weak in the banking industry.

But the CMA says while it considered whether the biggest banks should be broken up, it decided that would not “significantly improve” the market.

When it published its initial report last October, the CMA said more than half of consumer had stayed with their bank for more than 10 years and nearly 40% for more than 20 years.

That is despite the fact that the CMA found that current account customers could save £260 a year by switching to a better deal.

In the final report, Alasdair Smith, chair of the Retail Banking Investigation, said: “For too long, banks have been able to sit back and not work hard enough for their personal and small business customers.

“We believe the strong and innovative package of measures we are proposing will give customers the information and tools they really need to get a better deal out of the banks.

“They will also protect those who fall into overdraft from being stung with unexpected fees.”

Source: BBC Business

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Jessica Tranter