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CMA Retail Banking market investigation

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Response to CMA Retail Banking market investigation: Provisional decision on remedies

We welcome the opportunity to respond to the provisional decision on remedies as part of the CMA Retail banking market investigation.

We are responding to the proposed remedies regarding overdrafts. Overdrafts are a significant part of the consumer credit debt problems that StepChange Debt Charity clients face. Figures from 2015 show that:

  • Over half (55.1%) of people seeking advice from StepChange Debt Charity had one or more overdraft debts.
  • The average overdraft debt of our clients was just over £1,725.

We welcome that the CMA has proposed additional remedies focused on tackling particularly unarranged overdraft users. However, we are concerned that these proposed remedies do not go far enough for the millions of overdraft users who are experiencing financial difficulties. We urge the CMA to consider strengthening their overdraft remedies in the final package:

  • We welcome the requirement for providers to auto-enrol all customers’ into overdraft alerts and provide a grace period to enable them to, where possible, avoid or reduce charges. However, we note that this will not be possible for many heavy overdraft users as many will not have ready access to funds to avoid charges.
  • We welcome the CMA proposal to involve the Financial Conduct Authority in the remedies package. We believe that the FCA should undertake work to set the level of the monthly maximum charge (MMC) as we do not believe PCA providers setting their own MMC will be effective.
  • We would urge the FCA to undertake further work to encourage providers to ensure there is more proactive support for persistent heavy overdraft users.

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