Decisions on overdraft fees and charges are a commercial matter for firms. The Financial Conduct Authority (FCA) requires firms to treat their customers fairly and has broad and robust powers to enforce breaches of its rules. The Competition and Markets Authority (CMA) also has the power to investigate anti-competitive market practices.
In its July 2017 review of high-cost credit, the FCA concluded that it had concerns about both arranged and unarranged overdrafts. It will investigate these concerns further, and where intervention is needed and justified, aim to consult in Spring 2018 on proposals concerning both overdrafts and other forms of high-cost credit. The Government supports the FCA’s work in this area and will continue to work with it to ensure that all consumers who use high-cost credit products are treated fairly.
The independent Financial Policy Committee’s (FPC’s) most recently published policy statement noted that consumer credit has been growing rapidly, but does not in itself present a material risk to economic growth through its effect on household spending. The FPC has brought forward its assessment of stressed consumer credit lending in the Bank’s 2017 stress test, noting that regulatory capital buffers for individual firms would be set so that each bank can absorb its losses on consumer lending.