| LONDON, April 10
LONDON, April 10 Britain's financial watchdog
may impose changes in how banks treat overdrawn customers after
its research showed people are paying too much when they go into
Banking fees have become politically charged, with lawmakers
and the government keen for more competition on the high street
after a series of mis-selling scandals in financial products.
There is also concern over sky-high interest rates charged by
payday loan companies.
The Financial Conduct Authority (FCA) said on Thursday it
will investigate how banks set and monitor limits to the 8
billion pounds in total that is overdrawn in any given week.
"Just about everybody who banks can have access to some sort
of overdraft facility - whether they've signed up for it or
not," said Christopher Woolard, director of policy at the FCA,
said in a statement.
Overdraft fees generate a third of the revenue from personal
account banking in Britain.
"The sheer size of this market is huge and with overdrafts
bolted on to over 30 million UK current accounts, we want to
make sure it is working well for consumers," Woolard said.
Fees on unarranged overdrafts or when a customer is allowed
to withdraw money beyond the arranged limit, are a particular
concern, with charges averaging 37 pounds a month, the FCA said.
About 10 percent of Britain's current account holders are
permanently or usually overdrawn.
Voluntary measures like annual summaries of charges, sending
text messages when a customer is overdrawn, and a buffer zone
before charges kick in, have already been introduced but many
people are still potentially paying too much, the FCA said.
"As part of these next steps, the FCA will also consider
making some voluntary measures mandatory in autumn 2014," the
Consumers tend not to consider overdraft fees when they
decide which bank to use so there is little pressure on lenders
to provide good value, it said.
Overdraft fees go to the heart of Britain's free banking
where customers typically pay no fee for day-to-day banking.
Lenders say overdrafts help pay the cost of providing free
banking, but the FCA doubts this.
"There is evidence that personal current accounts help banks
to sell a range of more profitable products. One aspect of this
is cash savings, which the FCA is currently exploring through a
market study," the watchdog said.
Consumer advice charities say overdrafts are common among
people seeking help although overdraft debt has been falling
since 2010, the FCA said.
The watchdog is also looking to help such vulnerable people
by imposing a cap on how much interest payday loan companies can
charge from January.
(Editing by Hugh Lawson)