The changes also mean providers will be required to advertise arranged overdraft
prices with an APR (annual percentage rate) to help customers shop around.
The bank reported overdraft
income of $3.7 million, 39% of its total noninterest income of $9.5 million.
The FCA has also announced it is: | Requiring banks and building societies to advertise arranged overdraft
prices with an APR (annual percentage rate) to help customers compare them against other products; | Issuing new guidance to reiterate that fees for refused payment should reasonably correspond to the costs of refusing payments; | Requiring banks and building societies to do more to identify customers showing signs of financial strain or in financial difficulty, and put strategies in place to reduce repeat overdraft
In 2017, the FCA revealed banks raked in PS2.4billion from customers who had unarranged overdrafts
The FCA first proposed the reforms back in December, saying it wanted to make overdrafts
simpler, fairer and easier to manage.
"Vulnerable consumers are disproportionately hit by excessive charges for unarranged overdrafts
, which are often ten times as high as fees for payday loans.
The regulator's consultation on unarranged overdrafts
is currently underway and is due to end later this month, with rule changes made by the end of the year, Bailey told the Public Accounts Committee.
"These changes would provide greater protection for the millions of people who use an overdraft
, particularly the most vulnerable," Andrew Bailey said.
HOW TO ESCAPE The smaller your overdraft
, the more options you have.
According to uSwitch.com, 20 per cent of people have no idea what their overdraft
costs them and 60 per cent didn't know they could switch bank account while being overdrawn.
This facility significantly improves customers' convenience, as they get an overdraft
facility upto Rs.