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ARTICLE · 17 FEBRUARY 2020

FCA Changes To Overdraft Charges

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In June last year, the Financial Conduct Authority (FCA) confirmed it was going to introduce reforms to "fix a dysfunctional overdraft market", ...

United KingdomFinance and Banking

In June last year, the Financial Conduct Authority (FCA) confirmed it was going to introduce reforms to "fix a dysfunctional overdraft market", to make overdrafts simpler, fairer and easier to manage. The aim? To protect the millions of consumers who use overdrafts. A handful of changes have already come into effect, with the remainder coming into force in April 2020. In this article, we look at the changes, their impact on the industry so far and who stands to benefit from them. 

What changes were proposed and why?

There was no surprise when the FCA announced in June 2019 that it was overhauling the overdraft market. Many considered the changes were long overdue, that the market needs to be more transparent, and in particular that the fees charged for a number of vulnerable customers going into unarranged overdrafts were disproportionately high. With this in mind, the FCA therefore ordered banks to:

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