From: FinTech Global
Hot on the heels of Monzo, Starling Bank has changed its overdraft fee rules on the back of a Financial Conduct Authority (FCA) decision.
The FCA published the Overdraft Pricing Policy Statement (PS19/16) in June 2019. It introduced new rules “designed to fundamentally reform the overdraft market and to address the harm we found which was high prices for unarranged overdrafts, complex pricing structures, low consumer awareness and the repeat use of overdrafts.”
The FCA argued that the new rules will make “overdraft pricing simpler, fairer and easier to manage.”
The new rules will kick into force on April 6 2020.
However, banks are already scrambling to update their overdraft pricing. Monzo announced its new price plan last week.
Now Starling Bank has revised its overdraft charges too.
“Borrowing money on an overdraft can be stressful enough without having to worry about whether or not you can understand the charges attached,” said Anne Boden, founder and CEO of Starling Bank, in blog.
“That’s why Starling has always had a simple, transparent and easy-to-understand approach to its overdraft charging with a single flat interest rate of 15% (EAR variable). We’re now revising the overdraft rate on our personal current account from 15% to 15%, 25% or 35%, dependent on customers’ credit scores from 1 April 2020. And I wanted to take some time to personally explain why.
“Overdrafts are important and provide short-term assistance that customers can dip into when they are feeling the pinch financially. Because we’re sensitive to this, we’ve never charged additional fees on top of the interest customers pay.
“In fact, when the financial watchdog, the [FCA], outlined new proposals around overdrafts last year, aimed at outlawing many of these practices and at helping consumers better understand overdraft fees, we applauded.”
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