MP Faisal Rashid for Warrington South, has called on Lloyds Banking Group to scrap their new tiered overdraft system. He made the calls in a letter to the Bank, which was co-signed by 19 Labour MPs.
The new overdraft system, announced in November 2018 and introduced in January this year, could see customers who go overdrawn by less than £1,250 required to pay an annual interest rate of 61%.
Affinity Trade Union, the largest independent trade union representing Lloyds Banking Group staff, argue that Lloyds have introduced these measures to maximise profits in anticipation of new Financial Conduct Authority measures coming into effect at the end of 2019.
The letter calls for a full explanation of the company’s rationale behind its new tiered overdraft system. As the largest overdraft provider in the UK, the impact of Lloyd’s new measures will be widespread. The letter also reminds the Banking Group of its moral responsibility to the British taxpayer after being bailed out during the financial crisis to the tune of £20.3bn.
Faisal Rashid MP said:
“Before being elected as the MP for Warrington South, I worked in the banking and finance industry for 20 years. I know from personal experience that responsible financial institutions can be drivers of positive change and shared prosperity. It is therefore deeply disappointing that Lloyds Banking Group has taken the decision to introduce these new overdraft charges. They represent an opportunistic and irresponsible form of lending which damage the integrity of the financial services industry.
“While the measures are not illegal under existing regulations, it is concerning to see Lloyds proclaim itself as a company committed to ‘Helping Britain Prosper’ while introducing measures which seem designed to maximise profits from customers before the existing fee structure is banned by the Financial Conduct Authority next year.
“My Labour colleagues and I are urging Lloyds Banking Group to rethink the changes and to abandon this ill-conceived fee structure”.
Affinity Trade Union General Secretary Mark Brown said:
“Lloyds knows its pricing structure is going to be banned but in the meantime is taking advantage of its customers in the most egregious way possible”.