CMA launch review into unarranged overdraft alerts
First published by Author on August 22, 2019 in the following categories: Banking Sector Industry and tagged with cma | competition law | retail banking
Following the Retail Banking Market Investigation Order 2017, the Competition and Markets Authority (CMA) has announced a review into the unarranged overdraft alerts aspect of the order.
The decision for a review to be carried out by the CMA was outlined at the start of July. It involves potential changes that may come about as a result of the FCA (Financial Conduct Authority) becoming involved with new rules set for the end of the year.
With banks having made significant amounts of money for a number of years from fees charged for overdrafts, this continues to be an important matter for regulators to keep an eye on.
About the review into unarranged overdraft alerts
The review concerning Part 6 of the Banking Market Investigation Order 2017 that relates to unarranged overdraft alerts stems from new rules coming into force at the end of the year that have been pioneered by the FCA.
New rules with regards to overdraft alerts are set to come into force in December 2019. The CMA believes that the part of the 2017 order that deals with this will therefore be suspended, which appears to have been anticipated by the CMA when the order was made anyway. The CMA has confirmed that they envisaged the responsibility for this would eventually move into the hands of the FCA.
What the CMA wants to ensure is that a review is launched to confirm whether the new FCA rules will constitute as a change of circumstances that therefore means the overdraft part of the order is superseded. Interested parties were given until 22 July 2019 to make comments and supply evidence where necessary.
What happens next?
With the likelihood that the part of the CMA order relating to unarranged overdraft alerts will be superseded by the new FCA rules, it’s expected that that part of the order will be suspended.
This isn’t an issue. It simply means that the enforceability of rules relating to unarranged overdraft fee alerts should move over to the FCA with the launch of their new rules at the end of the year.
A final decision from the CMA’s review is expected to be published in November 2019 after a provisional decision that’s expected to be confirmed next month.