Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of reducing the bank overdraft penalty rate for the remainder of the covid-19 outbreak.

The pricing of financial products, including the interest rates charged on overdrafts, remains a commercial decision for firms and the Government does not seek to intervene in such decisions.

In April 2020, in response to the Covid-19 pandemic, the Financial Conduct Authority (FCA) announced a series of temporary proposals to provide emergency support for consumer credit customers who were facing short-term cash flow problems as a result of the Covid-19 outbreak. On overdrafts, firms were expected to provide up to £500 interest free buffer for customers, if requested, and make sure that customers did not see increased overdraft fees.

In September 2020, the FCA announced updated guidance to ensure that firms continued to provide tailored support for users of consumer credit and overdraft products who continue to face payment difficulties due to Covid-19. Where a customer needs further support, firms are expected to use measures such as reducing or waiving interest, agreeing a programme of staged reductions in the overdraft limit, or supporting customers to reduce their overdraft usage by transferring the debt.