I'm standing with consumer champion group Which? and 83 of my fellow MPs to make a stand against banks charging rip-off overdraft fees that can be worse than a payday loan. It's time for the banks to stop cashing in on those who can afford it least. Which? first raised the alarm over these fees in 2016, but new research shows the issue still exists.
The consumer champion compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high-street banks with borrowing the same amount for the same length of time through a payday loan. Overall, 13 of the banks investigated charged more than a payday loan company, and considerably more so in several cases.
The FCA previously capped payday loan charges, meaning that the cost of a loan in our scenario would be £24. Which? found:
• Santander is almost 7.5 times* higher and £155 more expensive, charging its customers a massive £179 over 30 days.
• TSB is over 6.5 times more costly, charging £160.00.
• This is followed by HSBC and First Direct – over 6 times higher, at £150.
• RBS and Natwest are £144 and 6 times higher.
Now, Which? has written a letter to the FCA along with 84 MPs from all the main parties, demanding the Financial Conduct Authority takes urgent action to end this unfair practice by restricting unarranged overdraft charges to the same level as arranged overdrafts.