The Financial Conduct Authority has rightly pointed to the beneficial effect on overdraft pricing that its new rules have created for the most financially vulnerable regular users of unarranged overdrafts. However, today it has also rightly asked banks to explain the rationale for their new pricing, that sees some other overdraft users facing significantly higher costs.
Peter Tutton, StepChange Debt Charity Head of policy, said: “We welcome this step from the FCA. The new rules on overdraft charges are absolutely necessary to end a longstanding cause of harm to the most financially vulnerable customers. But the FCA now need to be watchful that banks do not perpetuate unfairness or financial harm in another form. It is important that consumers see the new pricing as fair and competitive; and the FCA needs to be sure that the repeat use rules are effective in preventing more people from getting trapped in a cycle of expensive and harmful overdraft debt.”