Some of the most vulnerable consumers in society could save up to £100m a year under the Financial Conduct Authority’s (FCA) plans to overhaul unarranged overdrafts, according to its chief executive Andrew Bailey.

Bailey yesterday told MPs that the authority wants to bring the pricing of unarranged overdrafts more in line with that of arranged overdrafts to prevent lenders from charging higher prices. The FCA’s consultation on unarranged overdrafts is currently underway and due to end this month, with Bailey telling the Public Accounts Committee that rule changes will be implemented by the end of the year.

According to the regulator, lenders make more than ten times more in revenue from unarranged lending for each pound lent than for arranged overdraft lending.

The FCA noted that the cost differences of providing the two overdrafts did not justify the “much higher prices” for unarranged overdrafts. Speaking to the committee, Bailey said unarranged overdrafts tended to fall “much more heavily on the most vulnerable in society”.

“We believe that the savings that would come to consumers are quite substantial actually, we’re talking something over £100m a year,” he added.

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