UK200Group shares views on Competition and Markets Authority's proposal to force capping of bank overdraft fees

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Members of the UK200Group of independent accountancy and law firms have today shared their views on the Competition and Markets Authority’s (CMA) latest proposals which could force banks to cap monthly overdraft fees, to protect both SMEs and personal customers who regularly rack up steep charges


Under new proposals, banks could be forced to notify customers by text, email or app alert when they are close to their overdraft, in their overdraft, or have had a payment declined. The competition watchdog's proposed shake-up of the rules on overdrafts comes as it delayed a wider report looking at competition in retail banking.


The CMA had hoped to make its final proposals to improve competition in the small business banking sector and personal current account (PCA) market in May, but has now put the deadline back to August, in part to allow banks to digest its new proposals on overdrafts.



Jonathan Russell, Partner at UK200Group member firm ReesRussell, said:


“Bank charges should not be an issue for well run businesses on a day-to-day basis, as the business owners should be well aware of the state of their business finances and excess charges should not be happening. There is, however, still a degree of opacity in the charges; even those agreed, between banks and small businesses and often the problem is that small businesses know they are going to exceed their formal facility and agree extensions without enquiring about the cost.  Cash-flow management is vital within any business and good systems and controls must be in place to give the managers of the businesses the information they need. This is where, frequently, small businesses should be turning to their accountants to assist them, either with producing the information or putting in systems to ensure it is available.”


Daniel Shear, Principal at UK200Group member firm BKL, said:


“Some banks have been warning personal customers that they’re approaching their overdraft limit for free, for years – the bank I use being one such example.  They seem more focussed on providing good customer service than squeezing every last charge out of their customers.  Forcing banks to warn customers they’re about to breach their overdraft limit would of course be helpful, but customers don’t seem particularly bothered as, otherwise, they would have voted with their feet and moved their banking to a bank which already provides such a service for free.


“If charges are to be capped the question is how would banks recoup the shortfall in revenue?  Bank charges on all bank accounts have often been reported as the obvious solution.  As someone who prudently manages their bank account to ensure I don’t breach any overdraft limit I may have, I would find it unfair if I have to start paying charges to my bank just because they’re no longer able to charge people who choose not to manage their bank account in such a prudent manner, or simply don’t care.”



Duncan Montgomery, Tax Partner at UK200Group member firm Whittingham Riddell, said:


“While capping overdraft fees and alerting customers to limits is useful, the reality is that free banking in many sectors, or very low monthly fees, have to be compensated for somewhere. So, if these costs are capped, the banks will have  to try to recoup the money elsewhere. A fairer more transparent system of charging would be of benefit to everyone and move our banking system on to a better relationship with customers. An expected monthly charge and an expected overdraft fee beats free banking and high unexpected costs every time.”




Established in 1986, UK200Group is the leading mutual professional association in the UK with some 150 offices of quality-assured member accountancy and law firms throughout the UK totalling more than 500 partners who act for business clients and global links in nearly 70 countries. Our member’s contributions reflect the views, questions and answers arising from their 150,000+ SME clients. UK200Group provide services and products that are designed to enhance the business performance of its members. Telephone: 01252 401050 or: 01252 350733, email: or visit:


UK200Group is an association of separate and independently owned and managed accountancy and law firms. UK200Group does not provide client services and it does not accept responsibility or liability for the acts or omissions of its members. Likewise, the members of UK200Group are separate and independent legal entities, and as such each has no responsibility or liability for the acts or omissions of other members.

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