Overdraft charges are "the elephant in the room" as not enough has been done to tackle subsequent debt problems, a committee of MPs has said.
Bank overdrafts were the major source of high-cost borrowing for millions of people, the All Party Parliamentary Group on Alternative Lending concluded.
The costs can exceed those of payday loans, it said in a report.
However, further price caps - as seen in the payday sector - may not be appropriate, the MPs said.
Banks made £1.2bn in unauthorised charges each year, the committee heard during evidence, paid by those who were least able to bear the cost.
The committee said there were concerns over the transparency of charges and how easy it was to compare between different banks.
The model of "free banking", whereby banks clawed back costs through overdraft charges, required "government or regulatory attention", it said.
In its report on bank accounts published in August, the Competition and Markets Authority decided against a cap on charges.
However, the Financial Conduct Authority has now announced that it will examine the issue in detail itself.
In its report, the parliamentary group said that regulators should concentrate on competition and conduct.
"Interventions on price should be preceded by detailed impact assessments," it said.
For example, it said that it was "not as yet convinced that an extension of the payday price cap would benefit consumers".