British competition watchdog reduces overdraft costs of UK banks

UK customers to save €1.28 billion over five years as overdraft fees are to be capped as part of a package of measures set out by the British competition watchdog

17 May 2016, 9:08am

1 min read

The Competition and Markets Authority is proposing that customers receive more information about their accounts

In a market where it is notoriously difficult to compare the accounts on offer, the Competition and Markets Authority (CMA) is proposing that customers receive more information about their accounts and that banks make it easier for customers to compare the accounts on offer.

If personal customers switched to a cheaper product, annual savings could range from €114 for customers who do not use an overdraft to €196 on average for overdraft users.

The CMA has, however, stepped back from recommending banks be broken up to end the dominance of the big four - Lloyds Banking Group, Royal Bank of Scotland, HSBC and Barclays - which control 77% of current accounts.

The watchdog was also criticised for not taking bold enough measures after a preliminary report in October.

“We believe the strong and innovative package of measures we are proposing will give customers the information and tools they really need to get a better deal out of the banks. They will also protect those who fall into overdraft from being stung with unexpected fees,” CMA’s retail banking investigation chair Alasdair Smith said.

In 2014, €1.54 billion of banks’ revenues came from unarranged overdraft charges.