UK regulator to ban higher fees for non-negotiated overdrafts

UK banks will be barred from charging their customers higher rates for overdrafts under new proposed rules which, according to the financial regulator, would be the largest market intervention "in a generation".

Lenders will also be prohibited from charging fixed daily fees for overdraft borrowings, and will need to advertise products more clearly, including with annual percentage rates, to facilitate their comparison with creditors. ;others products.

The watchdog had already proposed several measures to improve the transparency of the market, which would allow customers to save around 200 million pounds a year. But on Tuesday, the market needed a more "basic" reform after finding that high tariffs actually financed wealthy clients. to the detriment of the most vulnerable

In the UK, most bank accounts provide basic services for free as long as the customer remains in credit, leading banks to rely on a small number of indebted accounts for most of their income. One in four people use an unplanned overdraft each year, but more than 50% of the banks' revenue from these products came from just 1.5% of customers in 2016.

Overdraft measures are part of a broader effort by the regulator to tackle what it considers to be unfair practices in the high-cost credit sector. Last month he proposed a price cap for "owner-operator" retailers such as BrightHouse, following the introduction of similar rules for payday lenders in 2015.

On Tuesday, he also confirmed the changes previously proposed to protect customers with credit cards, door-to-door loans and catalog credit cards, as well as new rules for the industry. booming sector "buy now pay now".