FCA Overdraft proposals consumer research – why we have changed our rules
Regulatory Updates | 07/06/19
In our Consultation Paper, CP18/42 (December 2018), we explained why fundamental reform was needed to the way banks charge for overdrafts. We proposed radical changes to the overdraft market to address harm from high prices for unarranged overdrafts, complex pricing structures, low consumer awareness and the repeat use of overdrafts.
Our package of remedies to make overdraft pricing simpler, fairer and easier to manage has been widely supported. We are:
• stopping firms from charging higher prices for unarranged overdrafts than for arranged overdrafts;
• banning fixed fees for borrowing through an overdraft – no daily or monthly fees, or fees for having an overdraft facility
• requiring firms to price by a simple annual interest rate
• issuing new guidance to reiterate that refused payment fees should reasonably correspond to the cost of refusing payments and
• requiring firms to do more to identify customers who are showing signs of financial strain or are in financial difficulty and implement a strategy to reduce repeat use.
