The Financial Conduct Authority (FCA) has proposed working with the competition regulator to ensure banks' overdraft mechanisms and fees are fairer. As overdraft fees generate a third of the revenue from personal account banking in Britain, the prospect of the financial watchdog imposing changes could hit the industry hard.After an investigation into charges incurred on both arranged and unarranged overdafts, the FCA said banking customer were paying "too much" and that fees were "complex and opaque".The FCA was sceptical of the banks' argument that overdraft fees enable them to provide free banking."There is evidence that personal current accounts help banks to sell a range of more profitable products. One aspect of this is cash savings, which the FCA is currently exploring through a market study," the regulator said.Fees on unarranged overdrafts are a particular concern of the FCA, with charges averaging £37 a month.It is estimated that roughly £8bn is owed to banks and building societies through overdrafts.The regulator suggested voluntary measures such as charges summaries, text messages and buffer zones have not worked well enough."As part of these next steps, the FCA will also consider making some voluntary measures mandatory in autumn 2014," the watchdog said.The FCA said it will also work alongside the Competition and Markets Authority to make sure any actions "complement and do not duplicate" its current work updating the Office of Fair Trading's 2013 review of the current account market.OH