Annual revenues from unarranged overdrafts among five of the largest providers were around 200 per cent of the average amount outstanding, according to FCA chief executive Andrew Bailey.
Speaking at the Finance and Leasing Association (FLA) dinner in London last night, Bailey said “we are concerned about the high fees and charges for unarranged overdrafts, especially when compared to their relatively small size”.
“The fees are also highly concentrated among users. Over half of total charges on unarranged overdrafts were applied to just 2 per cent of accounts. We are concerned the pattern of repeated use of such overdrafts that lies behind this concentration may be exacerbating financial difficulties and therefore harm for consumers.
“Based on our work, we are assessing whether we should act to simplify charges to ensure they are clear and better reflect actual use as well as the role of unarranged overdrafts more broadly in today’s market. Arranged overdrafts are also part of this picture, though their costs are lower.”
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