The FCA has today written to the UK's major retail banks, asking
them to provide evidence of how they have arrived at their new
overdraft interest rates, which have all been set at around 40%.
The FCA also asked the banks to clarify how they will deal with
customers who could be worse off following the changes, and expects
firms to take "positive steps" to helps these customers
– for example, by reducing or waiving interest, or offering a
continuation of overdraft borrowing at current rate of
interest.
The FCA's letter comes after it introduced wide-spread
reforms to the "dysfunctional" overdraft market to end
harmful unarranged overdraft charges. From April this year, firms
are required to charge a simple annual interest rate, without
additional charges for using an overdraft.
