New Overdraft Rules Start: Competition and Markets Authority rules requiring banks to issue an early warning before you go overdrawn start today (02/02/2018).
This is all about increased banking competition and being fair to consumers and businesses alike.#
In its research, the CMA found, as part of its Retail Banking Investigation, that no notice was given by banks when you are about to fall into overdraft and could result in high unauthorised overdraft charges. This makes the leading banks some £1.2bn per year according to the CMA.
In addition, 3 other measures are being deployed to encourage greater competition and innovation in the banking sector:
Opening Business Current Accounts: To be standardised, so that whatever bank you approach the system is the same meaning it is just as easy for you to go to a new bank as going to your own ‘personal’ bank account provider to open a business account.
Loan price and eligibility tool: Easier business loans with a standard business loan price and eligibility tool that we will be the same across 4 banks: RBS Group, Lloyds Banking Group, HSBC Group and Barclays. The CMA suggests this will make it easier to compare costs and loan details between banks.
Transaction history: The CMA claims that only 3% to 4% of businesses actually switch banks and by doing so, they could save themselves an average of £92 per year in business banking charges. Rules will allow both business and personal customers the ability to access the last five years transaction history, free of charge, so that you can easily compare and switch bank accounts.