FCA acts to improve competition in the current account market

Monzo Chat
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There’s not a lot of firm commitments in this press release but

The CMA recommended that the FCA research, test and implement measures to increase consumers’ engagement with their overdraft use and charges, and the FCA will take action in response to this recommendation. The FCA will also consider the need for rules in relation to the proposed Monthly Maximum Charge (MMC) and will begin to collect data in 2017 in order to do this.

I’m guessing that any recommendations here will be easy for Monzo to implement, as the recommendations will have to be watered down so that the legacy banks can implement them.

The FCA will also consider the need for rules in relation to the proposed Monthly Maximum Charge (MMC)

In addition, beyond the scope of the CMA’s recommendations, the FCA will also undertake work on overdrafts (both arranged and unarranged). This will fall within the FCA’s future work on high-cost credit and the FCA will publish more detail on the scope of this work in a Call for Input later this year.

This might have an impact on Monzo though, as if banks were forced to reduce their charges for planned / unplanned overdrafts, they would become more competitive (unless they just move their fees somewhere else :wink:).

Monzo overdrafts hopefully won’t fall into the high cost credit bracket though because -

There’s more on Monzo’s overdrafts here -

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Some highlights from this article, which Tom retweeted

http://www.reuters.com/article/us-britain-banks-regulations-idUSKBN12Y1UR

Britain’s financial watchdog will take a fresh look at free-in-credit banking and caps on overdraft fees after lawmakers slammed a competition review for failing to shake up high street lending and protect vulnerable customers.

The competition review stopped short of tackling free-in-credit banking, which some lawmakers say pushes up fees for unauthorized overdrafts to pay for it, meaning poorer customers are subsidizing better off customers.

The CMA has asked lenders to publicize more clearly how much they charge for unauthorized overdrafts, though lawmakers wanted a tougher approach with the FCA itself setting a cap on such fees.

…

The FCA said it will review in late 2018 how effective the CMA’s “contentious” approach has been

:rolling_eyes:

and whether a cap is needed. It will also compare overdraft charges with other forms of “high cost” credit.