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| Ban on unarranged overdraft charges considered by FCA | Ban on unarranged overdraft charges considered by FCA |
| (35 minutes later) | |
| Charges for unarranged bank overdrafts could be banned, under one option being considered by the Financial Conduct Authority (FCA). | Charges for unarranged bank overdrafts could be banned, under one option being considered by the Financial Conduct Authority (FCA). |
| It said the charges for those who go into the red without agreement can be high and complex. | It said the charges for those who go into the red without agreement can be high and complex. |
| Earlier this month, the UK's largest lender, Lloyds, said it was getting rid of unarranged overdraft fees altogether from November. | Earlier this month, the UK's largest lender, Lloyds, said it was getting rid of unarranged overdraft fees altogether from November. |
| Barclays has already stopped all unauthorised lending. | Barclays has already stopped all unauthorised lending. |
| However, other banks charge about £6 a day, or up to £90 a month. | However, other banks charge about £6 a day, or up to £90 a month. |
| "We believe there is a case to consider fundamental reform of unarranged overdrafts, and whether they should have a place in any modern banking market," the FCA said, in its review into the high-cost credit market. | "We believe there is a case to consider fundamental reform of unarranged overdrafts, and whether they should have a place in any modern banking market," the FCA said, in its review into the high-cost credit market. |
| "Maintaining the status quo is not an option," said FCA chief executive Andrew Bailey. Unarranged overdraft fees were often "significantly higher" than payday loans, he added. | "Maintaining the status quo is not an option," said FCA chief executive Andrew Bailey. Unarranged overdraft fees were often "significantly higher" than payday loans, he added. |
| However, the FCA made it clear that an outright ban on unarranged overdrafts was only one option being considered. | |
| It could impose a cap on charges, or demand some affordability checks before a bank lends money on an unplanned basis. | |
| A year ago the Competition and Markets Authority (CMA) decided against a cap on charges. | |
| The FCA has also highlighted concerns about the rent-to-own market, typically used by consumers to buy fridges, freezers and televisions. | The FCA has also highlighted concerns about the rent-to-own market, typically used by consumers to buy fridges, freezers and televisions. |
| "We think that is a sizeable issue, because people are paying three or four times more than if they used cash," Mr Bailey told the BBC. | "We think that is a sizeable issue, because people are paying three or four times more than if they used cash," Mr Bailey told the BBC. |
| The FCA said that one option might be for housing associations to provide such goods instead. | The FCA said that one option might be for housing associations to provide such goods instead. |
| Mr Bailey said there were also concerns about motor finance, a worry already highlighted by the Bank of England. | Mr Bailey said there were also concerns about motor finance, a worry already highlighted by the Bank of England. |
| "We're looking at affordability tests and the transparency of terms," he said. | "We're looking at affordability tests and the transparency of terms," he said. |
| The FCA will publish an update on this work in the first quarter of 2018. | The FCA will publish an update on this work in the first quarter of 2018. |
| Payday loans | Payday loans |
| As part of its review into high-cost lending, the FCA also looked at how the cap on payday loans was working. | As part of its review into high-cost lending, the FCA also looked at how the cap on payday loans was working. |
| It said that the cap, first imposed in January 2015, had delivered "substantial benefits" to consumers. | It said that the cap, first imposed in January 2015, had delivered "substantial benefits" to consumers. |
| Since then, no one has had to pay more than 0.8% a day of the amount borrowed. The maximum they pay is no more than twice the amount they borrowed. | Since then, no one has had to pay more than 0.8% a day of the amount borrowed. The maximum they pay is no more than twice the amount they borrowed. |
| The FCA said its review found that the cap meant 760,000 borrowers in this market were saving a total of £150m a year, that companies were now less likely to lend to customers who cannot afford to repay, and debt charities were seeing fewer people struggling with ballooning borrowing from payday loans. | The FCA said its review found that the cap meant 760,000 borrowers in this market were saving a total of £150m a year, that companies were now less likely to lend to customers who cannot afford to repay, and debt charities were seeing fewer people struggling with ballooning borrowing from payday loans. |
| Mr Bailey said the FCA would continue to focus its efforts on what else needed to be done in this area. | Mr Bailey said the FCA would continue to focus its efforts on what else needed to be done in this area. |
| Have you faced high overdraft charges? Let us know about your experiences. Email haveyoursay@bbc.co.uk with your stories. | Have you faced high overdraft charges? Let us know about your experiences. Email haveyoursay@bbc.co.uk with your stories. |
| Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways: | Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways: |
| Or use the form below | Or use the form below |