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FCA publishes high-cost credit review

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Ahead of a wider review into retail banking, the Financial Conduct Authority’s (FCA) new report on high-cost credit claims that the way that banks operate and charge for overdrafts needs “fundamental reform”. Proposed reforms include mobile alerts warning of potential overdraft charges, stopping the inclusion of overdrafts in the term ‘available funds’, requiring online tools to make costs of overdrafts clearer, introducing online tools to asses eligibility for overdrafts and making it clearer that overdrafts are credit or borrowing. FCA chief executive Andrew Bailey said: “Our immediate proposed changes will make overdraft costs more transparent and prevent people unintentionally dipping in to an overdraft in the first place. However, we believe more fundamental change is needed in the way banks charge customers for overdrafts.”

 

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