Banks could be hit by new restrictions under overdraft fee proposals

A bill introduced to Parliament by Labour MP Rachel Reeves would cap the maximum that banks are able to charge customers for unauthorised overdrafts.

The proposed law change would bring overdrafts in line with payday loans, which are subject to a charge limit of £24 per month. Banks currently make £1.2bn a year from unauthorised overdraft fees.

Reeves, a former Labour front-bencher who is on the Treasury select committee, will outline the plans tomorrow to the Financial Conduct Authority, The Guardian reports.

She said: "Banks are sending many people deeper into debt with extortionate charges on unauthorised overdrafts. They should have a responsibility to help people out of debt, rather than adding to their problems with rip-off charges."

 

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