An influential MP has slammed Lloyds Banking Group for trying to “game the system” with its new overdraft fees.
Labour MP Rachel Reeves, chair of the Business, Energy and Industrial Strategy select committee, said Lloyds’ upcoming overdraft changes would increase fees for the majority of customers and went against the spirit of recent recommendations from regulator the Financial Conduct Agency (FCA).
Reeves said: “It appears these changes at Lloyds will increase the charges for the vast majority of customers with overdrafts.
“While these fees might be legal, they are not with in the spirit of the FCA’s recommendations. 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.”
From tomorrow Lloyds will start moving customers to a new tariff that will increase fees for people borrowing less than £4,100.
The changes come as the FCA consults on a new overdraft fees regime, with potential changes set to stop banks charging more for unarranged overdrafts and requiring them to use simpler pricing structures and clearer advertising.
Lloyds said: “We welcome the FCA’s move to simplify the structure of overdrafts and the cost of unarranged overdrafts. We were the first major bank to remove charges for unplanned overdrafts, remove charges for returned item fees and our overdraft charges are proportionate to what is actually borrowed, making it easier for customers to understand the total costs involved.”