Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

CONC 5C.3 Interest rates for unarranged overdrafts to be no more than the interest rates for arranged overdrafts

CONC 5C.3.1R
  1. (1)

    1A firm must not:

    1. (a)

      enter into an agreement with a customer that provides for payment by the customer of an unarranged overdraft charge; or

    2. (b)

      impose on a customer, who enters into an unarranged overdraft, an unarranged overdraft charge,

    unless the charge satisfies the conditions in (2) or (3) (as applicable).

  2. (2)
    1. (a)

      This sub-paragraph applies where:

      1. (i)

        the customer concerned has an arranged overdraft in connection with the personal current account; and

      2. (ii)

        interest can become payable on some or all of the balance of that arranged overdraft.

    2. (b)

      The rate of interest that applies to the unarranged overdraft must not exceed the rate of interest referred to in (a)(ii) that applies to the arranged overdraft.

  3. (3)
    1. (a)

      This sub-paragraph applies where (2)(a) does not apply.

    2. (b)

      The firm must take reasonable steps to identify the type of personal current account provided by it (referred to in this sub-paragraph as the “comparable account”):

      1. (i)

        that bears closest resemblance to the personal current account held by the customer;

      2. (ii)

        in connection with which an arranged overdraft can arise:

      3. (A)

        of an amount equivalent to the amount of the unarranged overdraft; and

      4. (B)

        that can attract the payment of interest; and

      5. (iii)

        that has been made available to a significant number of its customers.

    3. (c)

      The rate of interest that applies to the unarranged overdraft must not exceed the relevant rate of interest identified in (d).

    4. (d)

      The relevant rate of interest for the purposes of (c) is:

      1. (i)

        where there is only one rate of interest that applies to arranged overdrafts connected to the comparable account, that rate; or

      2. (ii)

        where there are two or more rates of interest that apply to arranged overdrafts connected to the comparable account, the highest of those rates that is imposed on a not insignificant number of the customers to whom the account has been made available.

CONC 5C.3.2R

1If a firm imposes an unarranged overdraft charge in contravention of CONC 5C.3.1R(1)(b), the obligation to pay the charge is unenforceable against the customer and the customer is entitled to recover any sum paid by, or on behalf of, the customer under the obligation imposed.

CONC 5C.3.3G
  1. (1)

    1The purpose of CONC 5C.3.1R is to forbid firms from charging a customer who borrows a particular amount using an unarranged overdraft facility more than they would have had to pay (disregarding any fee-free amount) if they had borrowed an equivalent amount using their arranged overdraft facility (or, if they do not have an arranged overdraft facility, the highest amount that would have been payable (disregarding any fee-free amount) by a not insignificant number of other customers if they had borrowed an equivalent amount under an arranged overdraft facility connected with a comparable personal current account).

  2. (2)

    In CONC 5C.3.1R(1)(b), CONC 5C.3.1R(3)(d)(ii) and CONC 5C.3.2R, “impose” an unarranged overdraft charge includes creating the contractual right to receive it, and relying on, or enforcing, the contractual right or purporting to do so (“imposes” and “imposed” should be read accordingly).

  3. (3)

    CONC 5C.3.1R does not affect an unarranged overdraft charge, liability for which accrued before the date on which CONC 5C.3.1R came into force. CONC 5C.3.1R does affect, however, an unarranged overdraft charge liability for which accrued on or after the date on which CONC 5C.3.1R came into force, irrespective of whether the agreement was made before or after the date on which CONC 5C.3.1R came into force.

  4. (4)

    A firm is not prevented by CONC 5C.3.1R from charging a customer who borrows using an unarranged overdraft less than it charges the customer for using an arranged overdraft facility or from not charging for such borrowing.

  5. (5)

    The rules in CONC 5C.3.1R (other than CONC 5C.3.1R(1)(a)) and CONC 5C.3.2R are made pursuant to section 137C of the Act.