Lloyds Banking Group has been criticised for introducing new overdraft charges on Monday ahead of a proposed crackdown later this year. An MP described the fees - which will equate to an annual interest charge of up to 61% - as "unacceptable". The Financial Conduct Authority wants to scrap overdraft fees and replace them with a single interest rate. Lloyds Banking Group said: "The changes were announced prior to the FCA's latest recommendations." MP Rachel Reeves, who chairs the Business, Energy and Industrial Strategy select committee, said: "While these fees might be legal, they are not within the spirit of the FCA's recommendations." She said: "It is unacceptable for financial institutions to try to game the system at the expense of customers, particularly those struggling with their finances." Ms Reeves added that the new fees would "increase the charges for the vast majority of customers". What are the new fees?

A quarter of current account holders will be hit by the new charges, which come into effect on 14 January for Bank of Scotland, 28 January for Lloyds Bank and 4 February for Halifax customers.Rather than paying 1p every day for every 7 of overdraft used, the cost for the first 1,250 borrowed will increase to 1p a day per 6. That works out at an annual interest charge of 61%, much higher than widely-criticised guarantor loans or expensive credit cards aimed at people with poor credit records.