The Treasury is working closely with industry and the financial regulators to ensure the steps they take are properly coordinated with Government’s wider economic response to COVID-19.
Banks and building societies are ready and able to offer support to their customers who are impacted directly or indirectly by COVID-19. The Government encourages anyone concerned about their overdraft to contact their provider.
Last June, the FCA announced reforms to the overdraft market, including mandating that firms cannot charge more for unarranged overdrafts than arranged overdrafts, banning fixed daily and monthly charges, and a package of measures to improve the transparency of pricing. Overall the FCA expects these changes to make overdrafts simpler, fairer, and easier to manage and will protect the millions of consumers that use overdrafts, particularly more vulnerable consumers. All providers have set their new charging structures ahead of the deadline in April.
The overdraft reforms will end high unarranged charges and the removal of fees means many occasional arranged borrowers will pay less even though their headline rate of borrowing may increase. Across the market, FCA analysis in January found that 7 out of 10 overdraft users will be better off or see no change when the new rules come into force in April.
In instances where consumers see an increased cost for their overdraft borrowing, the FCA expects firms to engage with customers with large overdraft balances and repeat users of overdrafts to make appropriate interventions. This includes customers who are impacted by COVID-19.