Lloyds criticised by MPs over overdraft charging structure
Lloyds Banking Group’s overdraft fees have been criticised by a powerful committee of MPs, who say they appear to “fly in the face” of efforts by the regulator to make charges clearer and more transparent.
The banking group previously announced that it would introduce a tiered overdraft system, meaning fees will increase for anyone borrowing less than approximately £4,100, the committee said.
It comes at a time when the Financial Conduct Authority (FCA) has been looking at ways to make overdraft fees simpler and fairer.
The regulator recently proposed a shake-up which should give more help to “overdraft prisoners” who are persistently in the red.
Nicky Morgan, who chairs the Treasury Committee, has written to Lloyds Banking Group to raise the committee’s concerns about the increased complexities of the tiered system.
The committee is concerned about the impact on vulnerable customers, and the timing of the changes, considering the FCA’s work.
Commenting on the correspondence, Mrs Morgan said: “The FCA’s proposals seek to simplify overdrafts by banning tiered charging systems as early as December.
“It’s puzzling, therefore, that whilst welcoming the FCA’s simplification proposals, Lloyds Banking Group has introduced such a complex tiered system for – potentially – a relatively short period of time.
“Lloyds’ new overdraft fees appear to fly in the face of the FCA’s attempts to make overdrafts clearer and more transparent.”
A spokesman for Lloyds Banking Group said: “We note the comments of the chair of the Treasury Committee over the future of overdrafts and will reflect carefully on the points the chair has made.
“We have been working closely with the Financial Conduct Authority and other stakeholders on overdrafts and we are fully participating in the FCA’s consultation process.
“Overdrafts are an important issue and we will continue to listen to the views of the FCA and other stakeholders on the need to bring more clarity and transparency.
“We are committed to making it easier for customers to understand the total costs of borrowing, which is why in 2017 we were the first major bank to remove charges for unarranged overdrafts and returned item fees.”