FCA eyes action on banks for overdraft charges

FCA eyes action on banks for overdraft charges

The Financial Conduct Authority (FCA) is considering action against banks for charges levied on consumers who have unarranged overdrafts, according to Christopher Woolard, director of strategy and competition at the regulator.

Mr Woolard was speaking at the Responsible Finance Annual Conference in Glasgow on 20 March.

He said the FCA had recently taken action against credit card companies and payday lenders.

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The regulator is currently investigating overdraft charges as he said it is an area where there is potentially a “gap” in the regulation.

Mr Woolard said: “We can observe disproportionately high fees and charges. In fact, our research shows that there appears to be no clear relationship between the amount borrowed by the consumers and the amount charged by the firm.

Based on our early findings, we believe that there is a case to consider fundamental reform of unarranged overdrafts.”

The regulator said: “The evidence gathered so far reinforces our concerns about this particular part of the market . And we won’t shy away from taking action if we deem it necessary.”

He said that while the regulator has been investigating several areas of the consumer credit market, it is not his aim to restrict the flow of credit from responsible lenders to consumers, as he is aware of the social benefits of such lending.