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Darren welcomes FCA overdraft ruling

MP for Bristol North West, Darren Jones has welcomed news (announced on 18th December 2018) that the Financial Conduct Authority will stop banks charging higher prices for unarranged overdraft fees – an issue Darren campaigned on earlier this year.

Darren said:

“Back in May, I joined with consumer champion Which? and over 80 fellow parliamentarians in signing a letter calling on the Financial Conduct Authority (FCA) to bring an end to excessive overdraft charges.

Today the FCA announced that banks will no longer be able to charge higher prices for people who go over their arranged overdraft limit, in radical new proposals set down by the UK’s financial watchdog.

I welcome today’s strong action from the regulator as more than 50% of banks’ unarranged overdraft fees came from just 1.5% of customers in 2016, in some cases unarranged overdraft fees can be more than ten times as high as fees for payday loans and people living in deprived areas are more likely to be impacted by these fees”.

Under the new proposals, the FCA plans to:

•Stop firms from charging higher prices when customers use an unarranged overdraft – around 30% of overdrafts are unarranged.

•Simplify overdraft pricing so that arranged overdrafts are priced using a single interest rate on each account.

•Standardising the presentation of arranged overdraft prices so that they are easier to compare and requiring a representative annual percentage rate (APR) in certain advertising for arranged overdrafts.

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