UK FCA issues new policies to streamline ‘dysfunctional’ overdraft services
- The UK’s Financial Conduct Authority (FCA) said today that British banks and building societies will have to charge a standard annual rate for all overdrafts by April 2020.
- The new policy also bans fixed daily and monthly overdraft rates and is aimed at making overdrafts fairer, simpler and easier to manage.
Andrew Bailey, the FCA’s Chief Executive, said:
“The overdraft market is dysfunctional, causing significant consumer harm.” Bailey then went on to say: “We are simplifying and standardizing the way banks charge for overdrafts. Following our changes, we expect the typical cost of borrowing 100 pounds through an unarranged overdraft to drop from 5 pounds a day to less than 20 pence a day”.
The new rules will protect millions of UK consumers.