There was a crackdown planned later in 2019. Llyod bank has already introduced their new charges for overdraft and has faced high criticism. This would increase the annual interest charge to a huge amount of 61% which is not quite acceptable. Financial Conduct Authority has been planning to dismiss overdraft fees altogether and initiate one interest rate.
Llyod Banking Group has stated that their alterations were made public before the FCA could introduce their new suggestions. Chairperson of Business Energy and Industrial Strategy, MP Rachel Reeves said that although the latest fees are entirely legal, they do not go with the spirit of suggestions by FCA. She also said that financial institutions should not attempt at playing with the system at the cost of their customers where many of them are already suffering due to it. The latest fees would add up the charges for a huge number of customers.
Almost a quarter of present account holders would face a hit back due to the change in charges. The new rate would be executed on January 14 for Bank of Scotland. For Llyods Bank, the date is January 28. For Halifax customers, the date is January 4. According to the latest set charges, a person lending less than 4,100 pounds for their overdraft would have to pay more.
Financial Conduct Authority had planned to make a single interest rate payable for the customers. Thus, customers would find it easier to make a comparison between banks and hence invest in it accordingly. City Watchdog has placed a strict ban on all fixed interest rates associated with an overdraft.
Llyod has denied agreeing that their new overdraft charges might possibly be of any discomfort to anyone. They were in fact attempting to go along with the spirit of FCA to remove any complexity of interest rates.