LONDON: Britain will from next year force the country's banks to slash overdraft charges, helping millions of consumers, in particular the more vulnerable, regulators announced Friday.
The Financial Conduct Authority (FCA), which oversees matters of consumer protection, said Britain's "dysfunctional overdraft market" will face the biggest shake-up in a generation with the introduction of new rules from April.
"Our radical package of remedies will make overdrafts fairer, simpler and easier to manage," FCA chief executive Andrew Bailey said in a statement.
"Following our changes we expect the typical cost of borrowing £100 ($127, 113 euros) through an unarranged overdraft to drop from £5 a day to less than 20 pence a day," he added.
The FCA said that in 2017, companies in the UK made more than £2.4 billion from overdrafts, almost one third of which was from unarranged overdrafts.
It added that more than half of banks' unarranged overdraft fees came from just 1.5 percent of customers in 2016.
"The overdraft market is dysfunctional, causing significant consumer harm," Bailey added on Friday.
"Vulnerable consumers are disproportionately hit by excessive charges for unarranged overdrafts...Consumers cannot meaningfully compare or work out the cost of borrowing as a result of complex and opaque charges, that are both a result of and driver of poor competition," he added.
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