Simpler overdraft rates have helped borrowers but some still miss out on support, the FCA says.
An overhaul of the overdraft system in the UK has collectively saved borrowers £1bn, the City regulator says, but some people still miss out on support.to simplify the options for borrowers.The less complex system made fees easier to compare, the FCA said.
Overdrafts are intended for short-term or emergency use, the regulator said, with other types of credit more suitable for long-term borrowing.The savings came from reforms in 2019 and 2020 which tackled overdraft pricing, and provided support for customers who used overdrafts repeatedly. The policy was designed to help the 14 million people who suffered most because they slipped into unarranged overdrafts, without getting authorisation in advance from the bank, and paid much higher charges.
The FCA's evaluation of its own new rules found each customer who had an arranged overdraft or access to an unarranged overdraft saved, on average, £17.40 in charges in 2021 due to the new pricing rules. "The action we took to simplify overdraft charges and to tackle high unarranged overdraft fees has saved people across the UK almost £1 billion in total," said Sheldon Mills, from the FCA.Tackling It Together: How to deal with looming debtYou are not alone and there is help available. A trained debt adviser can talk you through the options.Citizens Advice suggest you work out how much you owe, who to, which debts are the most urgent and how much you need to pay each month.
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