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|FCA should set cap on unauthorised overdraft charges|
|Wednesday, 12 October 2016|
Stepchange Debt Charity have today released results from a new survey showing that almost two thirds of people seeking its help with overdraft debts have regularly exceeded their limit and faced charges of £45 each time on average. The full press release is attached.
Commenting on the findings of the survey, Rachel Reeves MP for Leeds West and Member of the Treasury Select Committee, said: “Today’s survey from StepChange Debt Charity makes it crystal clear that those who are struggling with debt are having to use their overdrafts to keep up – and their situations are being made worse by having to pay an extra £225 on average for falling into unauthorised overdrafts. These are people who are already in difficulty, trying to manage debt day to day. The banks should help them to manage their finances to get out of the cycle of debt, rather than pushing these people deeper into crisis with extortionate charges.
The proposals in this summer’s report from the Competition and Markets Authority did not go far enough. We need a proper effective cap on overdraft charges to help those most in need. That’s why I am calling on the Financial Conduct Authority to take action and I am urging them to set a cap for banks on unauthorised overdrafts as has been done for payday lenders. A recent study from Which? showed that the cost of borrowing £100 from some banks for 28 days amounted to as much as £90 in charges, compared with the maximum £22.40 on a payday loan. The FCA must look at this lending in exactly the same way and not shy away from setting a cap for banks too.”
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