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The Co-operative Bank Responds To FCA's Plans To Improve Competition In The Current Account Market

03 November 2016

The Financial Conduct Authority (FCA) has today announced that it will take action to improve competition in the current account market – including plans to provide consumers with greater transparency of overdraft costs and charges.

Matthew Carter, Products and Marketing Director, at The Co-operative Bank, comments: “Our own research shows that an estimated two-in-five (40 per cent) of overdraft holders, who have changed to a new provider since the introduction of the Current Account Switching Service in 2013, have incurred unexpected costs and charges as a result of dipping into the red. Those who use their overdrafts on a regular basis need to take fees and charges into consideration. However, it’s hard for consumers to do this research as complex charging structures make it difficult to calculate exactly what costs will apply to them.

“The FCA’s plans to provide consumers with greater oversight of the costs and charges associated with their account overdraft are a welcome step in the right direction.

“By reducing and simplifying a number of charges, and going beyond the industry proposed monthly cap by having a £60 quarterly cap, we have already developed an overdraft for our customers which is designed to put them in control of their finances, ensuring they are not penalised for small mistakes. This was guided by research with our own customers, those of other banks, and consumer group Which? to ensure it addresses actual overdraft behaviour and fulfils customers’ needs. Unlike other banks, we also continue to offers rewards to authorised overdraft customers even if they go into the red."

Key features of The Co-operative Bank overdraft:

  • A clear, simple and transparent charging structure that makes borrowing cheaper for all of our customers;
  • It is designed to put customers in control of their finances and not penalise customers for small mistakes or occasionally slipping into a debt position;
  • £20 buffer zone and discretionary waiver;
  • No unpaid item fees;
  • Industry-leading quarterly cap of £60 on charges, as opposed to the industry norm of a monthly cap;
  • Reduction in informal charge, lowering the overall cost of unauthorised borrowing;
  • Everyday Rewards customers can earn up to £5.50 per month on their account, even if they go into the red. Other providers remove reward benefits if customers go overdrawn.

-- ENDS --

Notes to editors:

*Research of 2,000 UK adults carried online, 6-8 September 2016.

References to ‘switchers’ refers to those current account holders with an overdraft who have switched within the past three years.

About The Co-operative Bank

The Co-operative Bank plc provides a full range of banking products and services to around 4.4 million retail and SME (Small and Medium Sized Enterprises) customers.  The Bank is committed to values and ethics in line with the principles of the co-operative movement.

The Co-operative Bank is the only high street bank with a customer-led ethical policy which gives customers a say in how their money is used.  Launched in 1992, the Policy has been updated on five occasions, with new commitments added in January 2015 to cover how the Bank operates its business, products and services, workplace and culture, relationships with suppliers and other stakeholders and campaigning.

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