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(Sharecast News) - UK banks were put on notice over overdraft pricing during the coronavirus crisis by the industry regulator on Wednesday, but escaped the threat of a full probe.
The Financial Conduct Authority (FCA) made the announcement after major lenders set identical overdraft rates of about 40% after excessive and opaque fees were banned in April - more than doubling previous charges.
Banks said the new pricing charges would cut their total overdraft revenue by between a quarter and a third - around £500m in total.
"Having reviewed the evidence we obtained, we do not intend to open a formal investigation at this stage," the FCA said. "We will be keeping a close watch on how prices develop, particularly during and after the coronavirus pandemic."
A full review of the rule changes would be carried out by next spring, the FCA said.
"It will take time to see the full impact of the new rules as banks respond competitively to one another. Overdraft charges are still higher than other mainstream borrowing products like credit cards and personal loans."
However, the FCA added that more transparency would put "competitive pressure" on overdraft fees as consumers shopped around.
Banks will be forced to publish historical overdraft pricing alongside information they already release about current account services. That will be released for the first time in August, reflecting rates charged between April and June.
Customers have been able to request mortgage, credit card and personal loan repayment holidays during the pandemic and ditch interest charges on arranged overdrafts up to £500. That support could be accessed until 31 October, the FCA confirmed.
2 Apr 2024 17:28
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