Lloyds is the latest bank to announces changes to its overdraft rates - and the City regulator said that seven out of 10 bank customers will be better off or unchanged as a result.

Customers of Lloyds Banking Group, which has a headquarters in Barnwood, will be charged rates of up to 49.9 per cent from April, but most will pay a rate of 39.9 per cent to go into the red, as reported by the BBC.

The Financial Conduct Authority (FCA), which demanded changes from banks, said the new system was much simpler. It said that customers at some large banks were being charged more than 80 per cent year, taking into account fees and charges.

Under the new rules, which come into force in April, banks and building societies will no longer be allowed to charge higher prices for unarranged overdrafts than for arranged overdrafts, which will help vulnerable customers.

About 19 million people use an arranged overdraft every year, while around 14 million use an unarranged overdraft. About 7.3 million use both an arranged and unarranged overdraft a year. Firms made about £2.4 billion in revenue from overdrafts in 2017, with about 30 per cent of that coming from fees and charges for unarranged overdrafts.

Most banks and building societies have chosen to set a rate very close to 40 per cent. The majority of customers of Lloyds, including the Halifax brand, will pay a new annual rate of 39.9 per cent - £39.90 for each £100 borrowed in an overdraft for a whole year. Lloyds will have various tiers of charges, with Club Lloyds customers paying 27.5 per cent, with some customers paying up to 49.9 per cent.

Lloyds will look at customers' past financial behaviour when deciding which rate to offer. It said risk-based pricing was standard practice for loans and credit cards and meant it could continue to offer overdrafts to a wider range of customers.

In recent years, Lloyds has closed a number of branches in suburbs and small towns in Gloucestershire, including Newent, Winchcombe and Cheltenham, leaving some communities with no local bank.