FOR a number of years now payday loan providers have rightly been criticised by financial regulators and the media for eye-watering interest charges.

The latest research from consumer group Which?, however, suggests high street banks are often even more ruthless and greedy when it comes to fees for unauthorised overdrafts, with some demanding far more than regulators would allow payday loan companies to charge for the same amount of borrowing over the same timescale.

The reality of this is shocking; Nat West, part of Royal Bank of Scotland, could charge a whopping £180 to borrow £100 for 30 days if it fell over two billing periods – that’s £156 more than the £24 a payday loan firm is allowed to charge.

Customers using Lloyds, which owns Bank of Scotland, and Santander, meanwhile, could end up paying £160 in fees.

These banks would no doubt counter that authorised overdrafts are a far cheaper option, and this is certainly the case.

But even the most prudent among us can end up needing an unauthorised overdraft from time to time - sometimes due to no fault of our own - and it simply cannot be right that high street banks are allowed to charge more than payday loans to accommodate this.

The Financial Conduct Authority has already announced plans to examine the high-cost credit market, which would include fees for unauthorised overdrafts.

With this in mind, we welcome the call made by Which? to cap charges and make sure customers are not charged substantially more for unarranged borrowing than an agreed overdraft.

It should not be forgotten that the government bailed out British Banks to the tune of £500bn in 2008. Royal Bank of Scotland is still majority owned by the taxpayer, and Lloyds partially so, which perhaps makes the level of charges being demanding by their businesses for unauthorised overdrafts even harder to stomach.

Consumers should also remember they have plenty of choice when it comes to banking – it could be time for them to exercise it.