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British lawmaker criticizes Lloyds for increasing overdraft fees

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British lawmaker criticizes Lloyds for increasing overdraft fees

Rachel Reeves, a Labour member of the U.K. Parliament, has accused Lloyds Banking Group PLC of "gaming" overdraft charges by making them more costly and complex for most of its customers, the Financial Times reported.

Beginning Jan. 14, the lender will start shifting customers to a new tariff that will increase fees for those seeking to borrow less than about £4,100. Lloyds is also set to introduce a tiered charging system, which critics said will make it more difficult for customers borrowing larger amounts to figure out how much they have to pay, the report noted.

In December 2018, the U.K. Financial Conduct Authority set out proposed changes to the overdraft market to better protect consumers from high costs and unexpected fees, including banning banks from charging higher prices when customers use an unarranged overdraft and requiring lenders to advertise arranged overdraft prices along with the annual percentage rate so customers can compare services. The proposals will likely come into force in December 2019, according to the FT.

Reeves said that while Lloyds' fees were legal, "they are not within the spirit of the FCA's recommendations," the report noted.