New overdraft rules kick in today - and your 'available funds' could drop to zero

18 December 2019

From today, banks and building societies will no longer be able to include a customer's overdraft in their ‘available balance’ or ‘available funds’


New rules on overdrafts announced by the Financial Conduct Authority (FCA) will come into force from today, 18 December 2019.

The changes are designed to make overdrafts, simpler, easier and fairer to manage.

From today, banks and building societies will no longer be able to include a customer's overdraft in their ‘available balance’ or ‘available funds’.

Lenders will also have to send alerts to customers when they dip into an arranged or unarranged overdraft to help avoid unintended overdraft use. Further changes will come into force next spring.  

From 6 April 2020, lenders will no longer be able to charge higher prices for unarranged overdrafts than for arranged overdrafts. They will also no longer be able to charge, fixed fees for overdrafts.  

The new rules will require banks and building societies to do more to identify customers who are showing signs of financial strain or difficulty too.

Experts say that the FCA's changes will come as a huge benefit to customers, especially those living in deprived areas.

Peter Briffett, chief executive of income-streaming app Wagestream, says: “Vulnerable customers living in deprived areas are far more likely to be hit by unplanned overdraft fees, and end up paying double what those in better-off areas pay.

“A simpler system of fees should make it easier for customers to compare bank accounts, but we fear that banks will find alternative ways of extracting this profit from their most deprived customers.

"This is the reality of the poverty premium.

What are banks doing?

A number of banks have already started to adopt the FCA’s changes.

Nationwide was the first to announce that it would be introducing a new single interest rate charge of 39.9% in November this year.

This was shortly followed by HSBC, first direct and M&S Bank who have since introduced a flat overdraft charge of 39.9%.

Challenger banks Monzo and Starling Bank will also introduce flat overdraft charges which will vary depending on a customers' credit score.

Monzo customers wishing to use an overdraft will be charged 19%, 29% or 39% while Starling Bank overdraft users will have to pay 15%, 25% or 35%.


HSBC Overdraft Raste

An absolute farce-it penalises those -such as I aged 67-who have managed their overdrafts within agreed limits for nearly 50 years. 40% is absolute usury! Typical FCA.20% w ould be about fair.


I just cannot understand how banks can charge up to 40% for an overdraft,When they are only giving at most a little 1.3% at that if you lend them money,But this is rip off Britain so really i should not be surprised at anything these banks will do to get money from you.I must admit i have not come across a bank as of yet that will not try to rip you off.

In reply to by steve (not verified)

Credit Unions give better…

Credit Unions give better rates for loans and anything they get is reinvested in the union - banks would never do that. Not sure what the credit interest rate is though

FCA Rules - Natwest

I am with Natwest, and they have not yet met the FCA deadline to make the changes. This is a shame because I believe the changes are a great idea and benefit consumers.

Overdraft fees

This interest the banks are charging will put people deeper in debt.
I feel sorry for people who have to live on overdraft cause 0 hour contracts
Witch is so wrong the bank put more people into poverty and some of
Them could take their own life cause they have no way too get out of
It . The banks should help people to get out of debt not put them into more debt put the rates 15%-20% not 39% that’s just greed.

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