High Credit and Overdraft Charge Review

Published / Last Updated on 29/11/2016

High Credit and Overdraft Charge Review.

The Financial Conduct Authority (FCA) has launched a consultation on high-cost credit, overdrafts and payday loans with a view to introducing price caps.

Since taking over regulation of consumer credit in April 2014, the FCA has focused on products that it believes pose the highest risks to its consumer protection objective. One area of focus has been high-cost credit, which includes payday loans, home-collected credit, catalogue credit, some rent-to-own, pawn-broking, guarantor and logbook loans. Other credit products – such as motor finance, credit cards, overdrafts and some instalment lending – may be high-cost, particularly for less creditworthy customers or depending on how they are used.

The consultation covers

High-cost products – and where they cause consumer detriment and, if so, to which consumers.

Overdrafts – looking at consumer protection and competition, to promote lower charges and make lenders more responsible when offering overdraft facilities.

Short-term credit (payday loan) price caps – A price cap came into force on 2 January 2015 and the FCA is looking to review this to drive charges down further.

Repeat and Rollovers – The FCA will continue to monitor the impact that repeat and multiple borrowing has on the market and consumers.


Since the FCA took over regulation of consumer credit in April 2014:

  • arrears rates have fallen by 25%
  • Around 800,000 less people are using payday loans
  • A fifth less loans are being approved

In the World of credit and debt, the FCA is certainly trying to reduce our reliance on debt.

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