More curbs on British bank overdraft fees needed say lawmakers

By Huw Jones

LONDON, Sept 6 (Reuters) - Measures from Britain'scompetition watchdog to crack down on high and complex overdraftcharges are not enough and regulators should impose a cap onfees, lawmakers said on Tuesday.

Parliament's Treasury Select Committee reached thisconclusion after asking Britain's main banks to detail theircharges for arranged and unauthorised overdrafts.

The responses from 12 banks published on Tuesday showed awide variety of charges, from daily to monthly flat fees, whileothers charged interest on the sum owed.

Consumer groups were dismayed when the Competition andMarkets Authority (CMA) last month set out ways to increasechoice in retail banking and cut overdraft fees, but decidedagainst capping unauthorised overdraft fees.

Instead, banks can set their own limits and publish them.

Andrew Tyrie, who chairs the parliamentary committee, saidthe banks' responses showed that some customers are beingcharged very high rates for arranged and unarranged overdrafts.

"The CMA's proposed remedies, which include a self-regulatedmaximum monthly charge, don't appear robust enough to deal withthis serious problem," Tyrie said in a statement.

Rachel Reeves, also a member of the committee, said theCMA's report did not go far enough and responses from the banksshowed that customers "don't stand a chance" of being able toidentify the best deal, calling on the Financial ConductAuthority, which regulates banking practices, to act.

"It must step up to the challenge and take necessary action,for example by imposing a monthly maximum charge on overdrafts,to ensure that those who are most financially vulnerable areprotected," Reeves said.

Antonio Simoes, chief executive officer of HSBC in Britain,said the CMA's range of proposals on overdrafts will help toincrease competition and ultimately improve consumer outcomes.

Co-operative Bank deputy CEO Liam Coleman said that as a"challenger" bank, it looked forward to supporting thecommittee's work to improve competition in retail banking.

Coleman has challenged the CMA's findings, which he said didnot reflect that the Co-operative Bank has "one of the mostcompetitive overdrafts" on the market. (Editing by Alexander Smith)