FCA publishes update on wide-ranging review of retail banking sector

Posted on June 27, 2018
Archive : June 2018
Category : Financial Conduct Authority News

FCA publishes update on wide-ranging review of retail banking sector

The Financial Conduct Authority (FCA) has today published an update on its Strategic Review of Retail Banking Business Models.

The Review is an in-depth and wide-ranging piece of work to give the FCA a greater understanding of retail banks’ business models, and how these may change in the future. This includes looking at how personal current accounts (PCAs) are paid for, the possible impact of technological and regulatory developments such as Open Banking and changes to payment services due to the revised Payment Services Directive (PSD2).  It sets out the progress made on the analysis of the issues and planned next steps.

The review is also critical to the FCA’s work on overdrafts.  The FCA has already expressed concerns that some potentially vulnerable people are paying significantly more for their current accounts through unarranged overdraft charges and fees. In May this year, the FCA proposed a set of potential changes on overdrafts for discussion as part of its high cost credit work and will consult on any changes later this year.

The review shows that most current account customers contribute to their bank’s profits, but a small proportion pay significantly more than others – around 10% of customers generate between a third and a half of all contributions to profits from current accounts.  The data also show that many consumers go to their current bank rather than shopping around when looking for other financial products.

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