Watchdog criticised over 'disappointing' action on high-cost credit
Summary
The City watchdog has ordered banks to do more to help the 19 million people who regularly use their overdrafts but has dismayed campaigners seeking a cap on the £2.3bn fees made when customers go into the red. The Financial Conduct Authority’s 18-month review into high-cost credit stepped back from a cap on overdraft fees because of fears it could be challenged in court by the banks, triggering sharp criticism from charities and MPs pushing for tougher action. However, he left the door open to a possible price cap in future, saying it could form part of a wider retail banking review due later this year. He said: “It’s wrong that the regulator continues to delay taking action, leaving consumers affected by this unfair practice trapped in debt.” The Bank of England has become increasingly concerned about rapid growth in personal borrowing, which is returning to levels unseen since the financial crisis amid sluggish wage growth and rising levels of inflation since the EU referendum almost two years ago. The latest figures show Britons increasing their borrowing at the fastest rate since November 2016 during April, when about £1.8bn worth of debt was racked up on credit cards, personal loans and car finance.