Lloyds share price: Group criticised over new overdraft charges

Lloyds Banking Group (LON:LLOY) has been accused of ‘gaming the system’ by making its overdrafts more expensive and complicated for most of its customers, the Financial Times has reported. The news comes just months before the fee structure it uses is set to be banned.

Lloyds’ share price has been steady in today’s session, having inched 0.27 percent higher to 54.86p as of 09:07 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having fallen into the red and currently standing 0.48 percent lower at 6,885.08 points.

Lloyds accused of ‘gaming’ overdraft

The FT reported today that Lloyds will begin moving customers across its brands to a new tariff which will increase fees for anyone borrowing less than about £4,100. It further plans to introduce a tiered charging system, which, the critics argue, will make it harder for customers to work out how much they will have to pay when borrowing larger amounts.

The move comes with the Financial Conduct Authority preparing to crackdown on overdraft fees, having proposed measures to stop banks from charging more for unarranged overdrafts, and forcing them to use less complex pricing and clearer advertising. The proposals are being consulted on and are expected to come into force in December.

“While these fees might be legal, they are not within the spirit of the FCA’s recommendations,” Rachel Reeves, a Labour MP, said of Lloyds’ changes, as quoted by the FT.

Bank welcomes watchdog’s move

The FT also quoted Lloyds as saying that it welcomed the FCA’s move to simplify the structure of overdrafts and the cost of unarranged overdrafts, noting that its “overdraft charges are proportionate to what is actually borrowed, making it easier for customers to understand the total costs involved”.

As of 09:17 GMT, Monday, 14 January, Lloyds Banking Group share price is 54.8p.