The watchdog said its cap on payday lending had saved some 760,000 borrowers a total of £150m per year, but it also identified “clear concerns” over other forms of high-cost credit.
In a review of the payday lending sector, published on Monday, the FCA singled out unarranged overdrafts, saying charges are often high, complex and difficult for consumers to understand.
The warning follows a similar note of caution from the Bank of England, which last week warned that consumer lenders are in a “spiral of complacency” after consumer credit had become too easy to obtain.
The FCA’s review said it may be necessary to make “fundamental changes” to the way unarranged overdrafts are provided.
Andrew Bailey, chief executive of the FCA, said high-cost credit products remain “a key focus” for the regulator because of the risks they pose to potentially vulnerable customers.
He added: “The nature and extent of the problems that we have found with unarranged overdrafts mean that maintaining the status quo is not an option. We are now working to resolve these issues while preserving the parts of the market that consumers find useful.”
Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: “The FCA is right to now turn its attention to other forms of high cost credit, as well as unauthorised overdrafts, which have become a common feature of the problems that debt charities help people to resolve.”
The FCA has decided to leave the existing payday loan price cap in place and to review it again in 2020.
