FINANCE ‘SCANDAL’: Peers warn excluding poorest from basic financial services must stop : Express.

EXCESSIVE bank charges on customers who run up overdrafts without prior agreement and the total cost of hire-purchase goods should be limited, a House of Lords committee has recommended.

 

Person unhappy with financesGETTY

Excessive bank charges without prior agreement should be limited say Lords

The House of Lords’ Financial Exclusion Committee also warned that older customers could lose out as banks increasingly focus on internet services while closing high street branches.

Interest rates for “high-cost, short-term credit” (HCSTC), including payday loans, are now capped at 0.8 per cent a day.

But fees for unarranged current account overdrafts – where people are not prevented from paying out more money than they have or is agreed on their usual overdraft facility – are exempted.

Research last month by Which? found that to borrow £100 for 30 days, unarranged overdraft charges at some high street banks were over seven times higher than the maximum permitted interest of £24 per £100 loaned by a payday lender.

It is clear that unarranged overdraft fees are unacceptably high

House of Lords Financial Exclusion Committee

Some banks charged customers borrowing £100 up to £156 more than HCSTC providers were allowed to levy.

Although many major banks do already have self-imposed caps, peers heard households in chronic debt could still face £45-a-month charges for as many as six months out of 12.

The overdrafts are often triggered by regular payments such as utility bills, council tax or rent.

Read More : Daily Express.

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