January 28, 2020 / 8:07 AM / 25 days ago

UK financial watchdog questions banks on overdraft pricing

FILE PHOTO: The Canary Wharf financial district is seen from Greenwich Park in London, Britain, May 7, 2019. REUTERS/Hannah McKay

LONDON (Reuters) - Britain’s Financial Conduct Authority (FCA) said on Tuesday it had requested further information from banks about overdraft pricing, following moves by some banks in recent weeks to significantly raise their rates.

The UK watchdog said it has been in regular contact with major banks and asked them on Tuesday to provide evidence of how they have arrived at their pricing decisions.

Several major banks have said they plan to more than double rates on some of their overdrafts to around 40%. The hikes come after a rule-change imposed by the FCA that requires banks and building societies to charge the same amount for all overdrafts from April 2020.

The FCA said banks and building societies needed to take positive steps to help customers who may be worse off or in financial difficulties as a result of high overdraft charges.

“We have asked to see their plans for how they are dealing with the most affected customers,” it said in a statement.

“We will be keeping a close eye on the market and we will act should we see continued harm.”

Reporting By Pamela Barbaglia; Editing by Rachel Armstrong

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