Proposal to force capping of bank overdraft fees

New CMA proposals could mean that banks will be forced to notify customers when they are approaching their overdraft limit, in their overdraft or have had a payment declined. BKL corporate finance partner Daniel Shear is amongst the UK200Group members to comment.


“Some banks have been warning personal customers that they’re approaching their overdraft limit for free, for years – the bank I use being one such example.  They seem more focused on providing good customer service than squeezing every last charge out of their customers.  Forcing banks to warn customers they’re about to breach their overdraft limit would of course be helpful, but customers don’t seem particularly bothered as, otherwise, they would have voted with their feet and moved their banking to a bank which already provides such a service for free.

If charges are to be capped the question is how would banks recoup the shortfall in revenue?  Bank charges on all bank accounts have often been reported as the obvious solution.  As someone who prudently manages their bank account to ensure I don’t breach any overdraft limit I may have, I would find it unfair if I have to start paying charges to my bank just because they’re no longer able to charge people who choose not to manage their bank account in such a prudent manner, or simply don’t care.”


Further comment is available on the UK200Group website.

Daniel Shear

Partner, Corporate Finance

T +44 (0)20 8922 9321
E daniel.shear@bkl.co.uk

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