FCA curtails “dysfunctional” overdrafts market

Reforms that dramatically reduce the cost to financially-stretched customers of using unarranged overdrafts, could create a hole in income for banks that they seek to claw back elsewhere. Caroline Stevensonreports.

Caroline Stevenson(caroline.stevenson@wbd-uk.com) is legal director for banking and financial services at Womble Bond Dickinson (UK) LLP.

The Financial Conduct Authority published itsresponse to consultation paper CP18/42 with its High-Cost Credit Review: Overdrafts Policy Statement in June 2019. The policy statement confirms the final reforms the FCA are looking to implement to fix what it describes as a “dysfunctional” overdrafts market.