#AceFinanceNews – May.17: Banks should cap overdraft fees, says competition watchdogBanks should cap monthly unarranged overdraft fees and warn customers if they are about to go overdrawn, the competition watchdog says.
The Competition and Markets Authority says this and other measures could save bank customers £1bn over five years.
The provisional conclusions of the 18-month study into personal and business banking suggest competition is weak in the industry.
But consumer group Which? said the report was a missed opportunity.
Many banks already cap overdraft fees, but the CMA said some do not.
At one end of the scale, Barclays charges a maximum of £35 a month.
At the other end, Halifax charges a maximum of £100.
The average unauthorised overdraft fee – when the bank has not agreed to a customer going overdrawn – is £57.50 a month, according to Moneyfacts.
At that average fee, if someone were to go overdrawn every month they could end up paying £690 a year. Interest is charged daily on top of that, at an average annual rate of 12.85%.
The CMA said that UK banks made £1.2bn from such charges in 2014.
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