Alex Cunningham has today joined forces with consumer champion, Which?, and over 80 fellow parliamentarians in signing a letter asking for the Financial Conduct Authority (FCA) to bring an end to rip-off overdraft fees.
The Labour Member of Parliament is concerned that residents in Stockton North might still be paying excessive fees on unarranged overdrafts, some of which may still cost over seven times more than a payday loan according to new research from Which?
Despite scrutiny from the regulator, Alex Cunningham feels not enough has been done to protect consumers from these sky-high fees.
“The time is long overdue for banks to stop cashing in on those who can afford it least. People who use overdrafts are often those in the most vulnerable and difficult of situations, and they shouldn’t be exploited for their vulnerability.”
Which? first raised the alarm over these fees in 2016, but new research shows the issue still exists.
The consumer champion compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high-street banks with borrowing the same amount for the same length of time through a payday loan. Overall, 13 of the banks investigated charged more than a payday loan company, and considerably more so in several cases.
The FCA previously capped payday loan charges, meaning that the cost of a loan in our scenario would be £24. Which? found:
- Santander is almost 7.5 times* higher and £155 more expensive, charging its customers a massive £179 over 30 days.
- TSB is over 6.5 times more costly, charging £160.00.
- This is followed by HSBC and First Direct – over 6 times higher, at £150.
- RBS and Natwest are £144 and 6 times higher.
- Meanwhile, Smile, Co-operative Bank, Yorkshire Bank and Clydesdale Bank are all 5 times more expensive, charging £120.
Now, Which? has written a letter to the FCA along with 84 MPs from all the main parties, demanding the Financial Conduct Authority takes urgent action to end this unfair practice by restricting unarranged overdraft charges to the same level as arranged overdrafts.
For more information, contact Alex on 020 7219 7157 or on firstname.lastname@example.org