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  1. Point in time
    2020-12-29

BCOBS 2.2B General information about overdrafts for personal current accounts

BCOBS 2.2B.1R
  1. (1)

    12A firm must ensure that a direct offer financial promotion includes the information set out in BCOBS 2.2B.2R if:

    1. (a)

      it relates to an account, other than a current account mortgage which:

      1. (i)

        is a payment account within the meaning of the Payment Accounts Regulations; and

      2. (ii)

        does not fall within paragraph (2); and

    2. (b)

      it is made in writing.

  2. (2)

    An account falls within this paragraph if it is offered on terms that:

    1. (a)

      an agreement which provides authorisation in advance for the banking customer to overdraw on the account cannot arise; and

    2. (b)

      either:

      1. (i)

        the account cannot become overdrawn without prior arrangement; or

      2. (ii)

        no charge is payable (by way of interest or otherwise) if the account becomes overdrawn without prior arrangement; and

    3. (c)

      no charge is payable where the firm refuses a payment due to lack of funds.

  3. (3)

    In the case only of a direct offer financial promotion on paper, it is sufficient for the purposes of (1) if the direct offer financial promotion is accompanied by the required information on a separate sheet.

BCOBS 2.2B.2R

12The information required by this rule is:

  1. (1)

    general information about overdrafts consisting of, so far as is relevant to the account or accounts that are the subject of the direct offer financial promotion:

    1. (a)

      an explanation that an overdraft is a borrowing or credit facility;

    2. (b)

      a general description of the nature and principal features of arranged and unarranged overdrafts associated with the personal current accounts offered by the firm;

    3. (c)

      a general explanation of the principal risks associated with:

      1. (i)

        overdrawing without prior arrangement; and

      2. (ii)

        opting out of an unarranged overdraft facility (if the firm’s terms and conditions permit this).

    4. (d)

      a general explanation of what may happen when a customer attempts to exceed an arranged overdraft limit or to overdraw in the absence of an arranged overdraft;

    5. (e)

      a general explanation of how the use of an arranged or unarranged overdraft might impact a banking customer’s credit file;

  2. (2)

    information about the availability of the following tools and how a banking customer can access them:

    1. (a)

      the overdraft cost calculator required by BCOBS 8.2; and

    2. (b)

      (if BCOBS 8.3 applies to the firm in relation to the personal current account) the overdraft eligibility tool required by BCOBS 8.3.

BCOBS 2.2B.3R
  1. (1)

    1 2The information required to be included under BCOBS 2.2B.2R must be:

    1. (a)

      concise;

    2. (b)

      in clear, simple language; and

    3. (c)

      presented prominently.

  2. (2)

    The information required to be included under BCOBS 2.2B.2R must be presented together.

BCOBS 2.2B.4G
  1. (1)

    12A firm may consider including the following in the information included to comply with BCOBS 2.2B.2R(1):

    1. (a)

      that overdrafts are primarily intended for short-term borrowing and are not generally suitable for longer-term borrowing;

    2. (b)

      an explanation of what an arranged overdraft is and how to request one;

    3. (c)

      an explanation of what an unarranged overdraft is and how it might arise;

    4. (d)

      that use of an overdraft will or may give rise to interest or other charges (as applicable) and how a banking customer can find out more; and

    5. (e)

      that attempting to exceed a credit limit or become overdrawn without a pre-arranged overdraft may result in items not being paid and that this will or may incur charges.

  2. (2)

    Where the nature and features of arranged and unarranged overdraft facilities associated with the accounts that are the subject of the direct offer financial promotion differ significantly between accounts, the firm should set out the ways in which they differ.

  3. (3)

    The information provided under this chapter should be general in nature, but a firm may indicate where additional or more detailed information can be found.

  4. (4)

    Information will not be treated as included prominently unless it is presented, having regard to other content it is presented alongside, in such a way that it is likely that the attention of the average banking customer would be drawn to it.

  5. (5)

    The effect of BCOBS 2.2B.1R(1) is that the information must be incorporated in the direct offer financial promotion itself. It is not sufficient, for example, to include in a direct offer financial promotion that appears on a website a link to a separate page containing the information. BCOBS 2.2B.1R(3) provides a limited exception to this where a direct offer financial promotion is on paper, in which case the information may accompany the direct offer financial promotion as a separate document.

BCOBS 2.2B.5G

12Firms are reminded that they will also need to comply with the rules in CONC 3 (Financial promotions and communications with customers) where those rules apply.