On 2 October 2019, the FCA published Policy Statement 19/25: Overdraft Pricing and Competition Remedies (PS19/25).
Earlier this year the FCA published Policy Statement 19/16 which changed the way in which banks and building societies charge for overdrafts. The Policy Statement was part of the FCA’s High-cost Credit Review. The new rules were designed to fundamentally reform the overdraft market and address the harm the regulator found which was high prices for unarranged overdrafts, complex pricing structures, low consumer awareness and the repeat use of overdrafts. At the same time the FCA issued Consultation Paper 19/18 which contained further proposed rules that would require firms to publish a range of overdraft pricing details, and which were designed to increase transparency and raise awareness of firms’ overdraft charging structures.
In PS19/25 the FCA sets out its final rules and feedback to the responses to Consultation Paper 19/18. The FCA reports that it has made the rules with minor changes to reflect some of the feedback received.
The FCA intends to require firms to publish information on overdraft prices as part of the current account services information. However, in light of the feedback received the FCA has made some small changes designed to make the information that is published clearer, and more relevant, for both consumers and the consumer groups expected to use it. In addition, the rules are now included in BCOBS 7 not in CONC as consulted on so that all of the rules on the quarterly information firms must publish about current account services and overdraft pricing information are in BCOBS.
In PS19/25 the FCA also makes minor changes to its competition rules. It has amended the definition of private bank in BCOBS 7 and 8. The regulator is also exempting foreign currency accounts from its competition remedy rules and making minor changes to its alerts rules.
The revised definition of private bank in BCOBS 7 comes into force immediately. The new rules in BCOBS 8 come into force on 18 December 2019. The revised private bank definition, the exclusion of currency accounts and the rules on alerts automatic enrolment will be effective from that date.
The new rules on the publication of pricing information will come into force on 6 April 2020, in line with the overdraft pricing rules set out in Policy Statement 19/16.
The FCA states that it will carry out a post-implementation evaluation of its overall package of overdraft remedies. It does not expect to start the evaluation until at least 12 months after implementing the full package of remedies, which will be from April 2021.