Lloyds Bank ‘complex’ overdraft fees criticised by MPs

MPs have criticised Lloyds Bank for a “complex” overdraft fees structure announced in January, saying it will see fees increase for anyone borrowing less than £4,100.

Nicky Morgan, chair of the treasury select committee, has written to the bank to raise concerns over the complexity of its tiered overdraft fee charging system.

The rebuke by MPs comes as the Financial Conduct Authority (FCA) has been looking at ways to simplify overdraft fees and make them fairer.

The regulator has proposed banning tiered overdrafts, recently proposing an overhaul to give more help to “overdraft prisoners” who find themselves perpetually overdrawn.

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 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 FCA 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.”

Gareth Shaw, head of money at Which?, said: “While Lloyds has scrapped rip-off unarranged overdraft fees ahead of a long overdue ban coming into force, this complex pricing structure risks leaving consumers at risk of being hit with excessive overdraft charges by the back door – and undermines plans to simplify these fees.

“The regulator’s proposals should see positive change for millions of consumers who regularly use overdrafts but the regulator must also keep a close eye on firms’ practices to ensure all customers are treated fairly.”

(c) Sky News 2019: Lloyds Bank ‘complex’ overdraft fees criticised by MPs