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Debt charity welcomes overdraft changes

Money Advice Trust responds to the FCA’s changes to overdrafts


The Financial Conduct Authority (FCA) has today announced changes to the way banks charge for overdrafts.

The new rules include stopping banks from charging more for unarranged overdrafts than arranged overdrafts, ending fixed daily or monthly charges and requirements on banks and building societies to do more to identify customers showing financial strain or who are in financial difficulty.

The new rules will come into force on 6th April 2020, apart from the repeat use remedies which will be introduced on 18 December 2019.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“The FCA is right to introduce stronger protections for consumers in relation to overdrafts. These measures, including banning fixed charges and higher pricing of unarranged overdrafts, are a welcome step in the right direction and should help reduce costs for people who use this form of borrowing.

“From what we see at National Debtline, we know that repeated overdraft use is often a sign of financial difficulty. It is right that banks are required to do more to identify and support these customers – getting the right support and advice as early as possible can stop financial problems escalating further.

“It is now crucial that the FCA monitors these changes closely to help ensure that they do bring costs down. If this is not the case, the regulator needs to act swiftly to introduce a price cap.

“Anyone worried about their finances should seek free and impartial debt advice from a charity-run service like National Debtline.”
 
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