The planned Financial Conduct Authority (FCA) should be given the power to regulate banks on the complexity of charges to customers, according to consumer lobby group Which?, after a recent study suggests that consumers find it almost impossible to calculate overdraft penalties or compare charges across institutions.
The complexity of the charging structures may mean that many consumers are left at a loss as to what charges they may expect should they use their overdraft facility. Which? chief executive, Peter Vicary-Smith, said in a statement:
"While the Government has previously announced reforms to tackle unfair overdraft charges, they simply don't go far enough. It's extremely disappointing to find that bank charges are still too high, too complex and impossible to compare.
"It's essential that the Government gives the new financial regulator the power to limit these charges and to challenge their complexity. We want to see the new regulator put consumer protection at the heart of everything it does. The regulator must be a strong, open and proactive watchdog that stands up to the banks, not a lapdog."
The study was conducted using a group of Which? members, including one Maths PHD student. The group only managed to get 7 out of 48 of the calculations correct in the study. One volunteer for the group commented:
"Details on rates and charges should be accessible, be in plain English and in a standard format, so that banks can be easily compared."
At a glance it may seem easy for consumers to understand and compare overdraft charges as banks a system of daily interest or fixed fees, but many high street banks may have hidden and additional charges which can confuse consumers.
Which? called for the FCA to be "held accountable" and be given "clear powers to tackle excessive and complicated fees" on behalf of consumers.