The FCA have sets out their agenda and priorities for consumer credit today. Most importantly for the challenger banks, they will be considering restrictions on unarranged overdrafts
In particular, the FCA believes that fundamental changes in the way that unarranged overdrafts are provided may be necessary.
They’ve also found that (shockingly) their regulation of payday loans has had a positive impact so their price cap will remain in place until at least 2020 & they’ll also be reviewing the rent-to-own, home-collected credit and catalogue credit sectors.
Here’s some more details about this story from the BBC -
“We believe there is a case to consider fundamental reform of unarranged overdrafts, and whether they should have a place in any modern banking market,” the FCA said, in its review into the high-cost credit market.
“Maintaining the status quo is not an option,” said FCA chief executive Andrew Bailey. Unarranged overdraft fees were often “significantly higher” than payday loans, he added.
However, the FCA made it clear that an outright ban on unarranged overdrafts was only one option being considered.
