This is an important move by Lloyds. But it is best seen as part of a bigger picture, one that includes not only the FCA's study of high cost credit but also its credit card study and its earlier imposition (under parliamentary pressure let's not forget) of a cap on the interests charged by pad day lenders. And it is also of a piece with the Financial Policy Committee's concern about the rise in unsecured debt, with yesterday's Taylor report on the gig economy etc. and, critically, with the recent ONS data on declining household incomes.
What we are witnessing is a change in the shape of the UK economy and of household finances. And the attempts of firms, regulators and politicians to discern its causes and implications and adapt accordingly.
Regulators have an uncomfortable but pivotal role in unpicking this complex puzzle. If they underuse their powers they create perverse incentives for firms as the economy changes. But if they overuse them, regulation risks claiming an unhealthy monopoly of wisdom, one it can never sustain.
Any money Lloyds lose by this move may only be in the short term. And hopefully it is part of a much broader strategy (including its relationship with regulation) to help the UK's stretched households manage their finances better.
Fees for unplanned overdrafts are to be scrapped for the 20 million customers of Lloyds Banking Group, which includes the Halifax and Bank of Scotland.From November this year, any customer going over their overdraft limit will face no fees at all, Lloyds said.However, the bank may continue to block payments from the account until the overdraft is paid off.It follows criticism of high charges by consumer groups and the Competition and Markets Authority (CMA).The Financial Conduct Authority (FCA) is also expected to propose measures on overdraft fees within the next few weeks, as part of its inquiry into high-cost credit.