LONDON Measures from Britain's competition watchdog to crack down on high and complex overdraft charges are not enough and regulators should impose a cap on fees, lawmakers said on Tuesday.
Parliament's Treasury Select Committee reached this conclusion after asking Britain's main banks to detail their charges for arranged and unauthorised overdrafts.
The responses from 12 banks published on Tuesday showed a wide variety of charges, from daily to monthly flat fees, while others charged interest on the sum owed.
Consumer groups were dismayed when the Competition and Markets Authority (CMA) last month set out ways to increase choice in retail banking and cut overdraft fees, but decided against capping unauthorised overdraft fees.
Instead, banks can set their own limits and publish them.
Andrew Tyrie, who chairs the parliamentary committee, said the banks' responses showed that some customers are being charged very high rates for arranged and unarranged overdrafts.
"The CMA's proposed remedies, which include a self-regulated maximum monthly charge, don't appear robust enough to deal with this serious problem," Tyrie said in a statement.
Rachel Reeves, also a member of the committee, said the CMA's report did not go far enough and responses from the banks showed that customers "don't stand a chance" of being able to identify the best deal, calling on the Financial Conduct Authority, which regulates banking practices, to act.
"It must step up to the challenge and take necessary action, for example by imposing a monthly maximum charge on overdrafts, to ensure that those who are most financially vulnerable are protected," Reeves said.
Antonio Simoes, chief executive officer of HSBC in Britain, said the CMA's range of proposals on overdrafts will help to increase competition and ultimately improve consumer outcomes.
Co-operative Bank deputy CEO Liam Coleman said that as a "challenger" bank, it looked forward to supporting the committee's work to improve competition in retail banking.
Coleman has challenged the CMA's findings, which he said did not reflect that the Co-operative Bank has "one of the most competitive overdrafts" on the market.
(Editing by Alexander Smith)