To ask Mr Chancellor of the Exchequer, what steps the Government is taking to encourage banks to impose the voluntary cap on overdraft charges for personal current accounts recommended by the Competition and Markets Authority in 2016; and what assessment his Department has made of the effectiveness of that cap on customers' accounts where it has been imposed.
The government is committed to increasing competition in banking and welcomes the Competition and Markets Authority’s (CMA) final report on its retail banking market investigation as an important step towards the goal of a highly competitive banking system.
The CMA proposed a series of remedies in its final report to improve overdraft transparency. This includes requiring all personal current account providers to set a monthly maximum charge (MMC) for unarranged overdraft charges by Q3 2017. The CMA also recommended that the Financial Conduct Authority (FCA) assesses the ongoing effectiveness of the MMC and considers whether other measures could be taken to further enhance its effectiveness.
In addition to this, the Government welcomed the FCA’s commitment to look in more detail at overdrafts from both a consumer and competition perspective, as part of its broader review of the high-cost credit market.