Hi please can someone help me. I am trying to find out if monzo will be taking on board the fca guidelines about overdrafts
That if required they should provide the first 500 of an overdraft interest free the rates on anything beyond that should not be more then the recent changes which I believe was in april.
I’ve asked through the chat and I just keep getting a copy and pasted stock response. That they are currently reviewing how they offer overdrafts
Am I right in saying all fca regulated banks must implement these recommendations by 14th april?
Anarchist
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2
According to the FCA
…the full range of measures will apply by Tuesday 14 April 2020. This is to allow firms time to ensure they have the appropriate level of resources available to handle customer requests. All firms will be ready to receive customer requests by 14 April…
So, yes, Monzo will implement the measures.
However,
These measures won’t replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty. Consumers in financial difficulty should contact the Money Advice Service (MAS) for further guidance.
“Where a firm provides an arranged overdraft to a customer, and the customer has difficulties with their finances, or reasonably expects to have difficulties with their finances, due to the impacts of coronavirus, the firm should”
My reading of this is Monzo is not being asked to apply these measures to all. Indeed it states that the measures apply for 3 months from the request, so its quite possible that while I might not be expecting financial difficulties now in a month or 2 I might be. Being given a free overdraft for 3 months from now when not needed might worse my situation (as I might only get a month of use of it)
Firms don’t have to give free overdrafts to someone who doesn’t already have an overdraft facility. Also the bank knows what a customer does for work and needn’t apply these special measures to someone (like me) who is still working and has income coming in.
Also the bank only have to give free overdrafts on the cusomers main account (the one recieving wages or benefits), although I’d imagine many arent enforcing especially with the gig economy making this unclear in some cases
Most banks are taking the attitude not to make it more expensive for customers apart from Monzo that is!!!
I do wonder why they have decided to separate themselves from everyone else in terms of overdrafts.
I understand they don’t have the same income as a legacy bank but if Starling can do it why can’t Monzo?
They’re not refusing. I don’t believe that they should roll this out to everyone. It sends out the wrong message and can get innocent people caught up in debt when it’s advertised as “free”.
They’ve said that if you’re struggling to simply contact them and they’ll help out the best they can. Probably by applying this to your overdraft.
This applies now and at any point in the future too.
I don’t think it’s ridiculous.
Monzo are all about the numbers?
My point is not necessarily the free aspect but more fact near every other bank is ensuring there customers are no worsen off apart from Monzo.
Innovation???
Monzo employees (at least the ones I know personally) actually care about people and their financial health. Encouraging interest-free overdrafts for anyone that requests them was a bad move by the FCA in my opinion as, much like the lockdown itself, there is no exit strategy.
Better to help customers on a case-by-case basis. But sadly the bigger banks just don’t have the capacity to do that, especially with most call-centres being closed.
I think what you can say potentially your no worse off.
What can’t be said is that no Monzo customers will be worse off as this is clearly not correct.
True. My apologies. Although it is not what I said, what I meant was that the “encouraging” was done by the banks who were offering this facility before the FCA finalised their consultation, the banks who will happily take your interest once the three month period ends.
Well of course they will, it’s not going to be interest-free forever.
I think you’re confusing mortgages, which continue to accrue interest during the period you’re given a break from making any repayments, with overdrafts which won’t accrue interest and won’t require repayments because that’s the way overdrafts are structured.
Interest-free is not the same as repayment holiday. In my opinion, both of these measures are useful to certain subsets of customers, and are preferable than financial hardship.
Until the three months are over. Am I the only one who remembers the agony of paying back student overdrafts after graduating when they ceased to be interest-free?
I think before customers go to FOS because Monzo won’t offer them a free overdraft , or indeed cut the interest rate to zero on their overdraft , they should look at what the FCA is saying … I think from Monzo numbers 30 % of customers are using Monzo as their “primary personal accounts” - defined in the FCA advice as -
A primary account is the account into which a customer would usually receive, or would have received, their main source of income. Main source of income would normally include salary, wages (whether employed or self-employed) or pension payments.
Those Primary Account customers are what this advice is intended for and relate to , and then, additionally those in financial difficulty due to covid 19, the advice is not for anybody with a… insert banks name.… card, that feels they might like a free overdraft facility ( who wouldn’t ? ) … the advice is not for every user of Monzo who has a convenient overdraft with them as an additional source of funds apart from their main banks , and use their card as a "spending card " -
Why wouldn’t you go full monzo thread gives an indication of who is using Monzo bank almost as a “pre paid card” - the FCA guidance , in my opinion would exclude them from “the offer”
Having said all that Monzo WILL help out wherever they can, but I don’t think they are under an obligation because of the FCA advice to every Monzo customer with 10 quid sat in their account and a 100 pound overdraft
