Lloyds Bank criticised by MP for increasing overdraft fees despite watchdog's recommendations

Labour’s Rachel Reeves criticised the bank for its overdraft charges which, at the equivalent of 61 per cent per year, work out significantly more expensive than borrowing on most credit cards

Ben Chapman
Monday 14 January 2019 18:29 GMT
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'It appears these changes at Lloyds will increase the charges for the vast majority of customers with overdrafts,' Ms Reeves said
'It appears these changes at Lloyds will increase the charges for the vast majority of customers with overdrafts,' Ms Reeves said

Lloyds Bank’s new overdraft fees are against the spirit of recommendations from the City watchdog, an MP has said.

Labour’s Rachel Reeves criticised the bank for its overdraft charges which, at the equivalent of 61 per cent per year, work out significantly more expensive than borrowing on most credit cards or loans.

Lloyds Banking Group decided to push ahead with its plans despite recent recommendations from the Financial Conduct Authority (FCA) that banks should scrap daily fees on overdrafts and instead implement a single interest rate which can be easily compared with competitors.

“It appears these changes at Lloyds will increase the charges for the vast majority of customers with overdrafts,” Ms Reeves said.

“While these fees might be legal, they are not with in the spirit of the FCA’s recommendations.”

The Labour MP has frequently come up against big businesses and financial institutions in her role as chair of the Business, Energy and Industrial Strategy Committee, but in this case was speaking in her capacity as a campaigning MP.

Lloyds will begin charging its customers 1p every day per £6 they are overdrawn up to £1,250. It currently charges 1p for every £7.

Ms Reeves added: “It is unacceptable for financial institutions to try to game the system at the expense of customers, particularly those struggling with their finances.

“We need further action from banks and the regulators on the exorbitant fees charged on overdrafts. Lloyds should rethink these fees as a matter of urgency.

“We need an end to the excessive fees that continue to harm borrowers, particularly those with persistent money problems.”

Lloyds said: “The changes were announced prior to the FCA’s latest recommendations.”

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