In a letter addressed to the FCA signed by 84 MPs, Which? today [23rd May] demands urgent action on restricting unarranged overdraft charges to the same level as arranged overdrafts, alongside publishing findings that unauthorised overdrafts can cost more than payday loans.
Commenting on overdrafts, Peter Tutton, Head of Policy at StepChange Debt Charity, said: “Overdrafts are the second most common type of debt our charity deals with, leaving many at risk of falling into persistent problem debt by entering a cycle of using their overdraft from month to month. They are meant to be short-term, but our evidence shows that they can all too easily trap people in expensive and long-term cycles of persistent debt.
“Fundamental reform is needed. There has been positive action from some banks to make charging structures clearer and to abolish unarranged overdraft charges. We know that there is some good practice when it comes to the treatment of people with overdraft debt that can be built upon. Banks which have not yet done so should follow suit, while the FCA should investigate unaffordable lending in the overdraft market as part of its upcoming consultation on high-cost credit and overdrafts.”