Overdraft fees blast But FCA delays banks crackdown

THE city watchdog yesterday blasted banks overdraft charges – only to come under fire itself from debt charities. The Financial Conduct Authority’s review of high-cost credit concluded “fundamental changes in the way unarranged overdrafts are provided” were needed. It found charges “are often high” and can be hard for consumers to understand – and FCA boss Andrew Bailey said “maintaining the status quo is not an option”. But the regulator’s decision not to start doing anything about the sky-high fees until next spring prompted a storm of protest from debt charities and consumer groups.

Mike O’connor, of Step Change Debt Charity, said: “It is disappointing. The charges for unarranged overdrafts are a real problem for our clients.”

Gareth Shaw of Which? demanded: “The FCA must act swiftly to crack down on these exorbitant fees, as further delay will only cost

Oil = $52.3 consumers.” The FCA also raised concerns over rip-off rent-to-own shops, which often charge people up to 10 times the amount for goods such as washing machines,

Not-for-profit business Fair For You was set up in 2015 to offer hard-up people an alternative affordable way to buy household essentials.

Its chief Angela Clements warned: “Rent-to-own businesses have specifically targeted mothers in younger family households and followed dubious practices such as affordability checks being waived and lending decisions being made by commission-based salesmen.”

She called for lenders to be forced to conduct adequate affordability checks that all of the credit can be repaid by a customer without the addition of penalty costs and recovery action.

The FCA’S warnings about the dangers of catalogue credit, doorstep lending and car finance, were also welcomed.

Citizens Advice chief Gillian Guy said: “It’s good to see the FCA recognise the problems and the need for action. All too often people are able to borrow money which they can’t afford to pay back.”

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