Patricia Gibson, MP for North Ayrshire and Arran, has joined forces with consumer champion Which? demanding that the Financial Conduct Authority (FCA) ends rip-off overdraft fees.
According to Which? research, some North Ayrshire & Arran constituents might be paying excessive fees on unarranged overdrafts, costing over seven times more than a payday loan.
Despite scrutiny from the regulator, Mrs Gibson, who is SNP Spokesperson on Consumer Affairs, feels not enough has been done to protect consumers from these sky-high fees.
“It’s alarming that the majority of banks can still charge more than payday lenders through these rip-off overdraft fees. These extortionate fees can cost thousands of pounds a year, often hitting those who can afford it the least.
“The regulator cannot drag its heels any longer. We must see urgent action to restrict these charges, bringing them into line with arranged overdraft fees to finally end this unfair practice.”
Consumer organisation Which? compared the cost of borrowing £100 for 30 days in an unarranged overdraft across 16 high-street banks with the same amount for the same length of time through a payday loan. Overall, 13 of the banks investigated charged more than the payday lender 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 expensive, 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.
Now Which? with Patricia’s support, has written to the FCA demanding it takes urgent action to end this unfair practice. The FCA previously pledged to tackle the problem, but has left people still facing these exorbitant fees.