Banking customers have saved around £1 billion due to rules brought in by the Financial Conduct Authority (FCA), a new evaluation has found.

The rules took measures to simplify overdraft charges and to tackle high unarranged overdraft fees.

Pricing rules, which came into effect in April 2020, saved customers £500 million, while measures to help customers manage repeated overdraft use, which came into force in December 2019, saved users around £486 million, the FCA said.

The study found that the rules, affecting those who had an arranged overdraft or access to an unarranged overdraft, saved individual customers around £17.40 in charges in 2021.

“We know that overdrafts offer a convenient way to help some people manage temporary cash flow issues, but some banks were charging more than 80 per cent Annual Percentage Rate on arranged overdrafts, once fees and charges were factored in,” explained Sheldon Mills, executive director, consumers and competition at the authority.

The authority said the rules also help spur competition in the marketplace. It estimates that consumers will save up to £105 million in charges a year from now on due to its actions to tackle repeat overdraft use.

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