BCOBS 8.1 General and application

Special terms used in this chapter

BCOBS 8.1.1 R
  1. (1)

    12A “personal current account” means an account, other than a current account mortgage, which is a payment account within the meaning of the Payment Accounts Regulations (see BCOBS 8.1.2G(1));

  2. (2)

    A “private bank” is a bank or building society or an operationally distinct brand of such a firm,3 over half of whose personal current account customers each had throughout the previous financial year net assets with a total value of not less than £250,000. For this purpose:3

    1. (a)

      net assets do not include:3

      1. (i)

        the value of the personal current account customer’s primary residence or any loan secured on that residence;3

      2. (ii)

        any rights of the personal current account customer under a qualifying contract of insurance within the meaning of the Regulated Activities Order; and3

      3. (iii)

        any benefits (in the form of pensions or otherwise) which are payable on the termination of the service of the personal current account customer or on their retirement and to which the personal current account customer (or the personal current account customer’s dependents are), or may be, entitled; and3

    2. (b)

      “previous financial year” means the most recent period of one year ending on 31 March.3

  3. (3)

    An “excluded account” is a personal current account that 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.

  4. (4)

    an “arranged overdraft” is the facility provided for in an authorised non-business overdraft agreement that is a regulated credit agreement.

  5. (5)

    an “unarranged overdraft” is a regulated credit agreement that arises as a result of:

    1. (a)

      a personal current account becoming overdrawn in the absence of an arranged overdraft; or

    2. (b)

      the firm making available to the banking customer funds which exceed the limit of an arranged overdraft.

BCOBS 8.1.2 G
  1. (1)

    12The definition of “personal current account” refers to the definition of a “payment account” under the Payment Accounts Regulations, that is: “an account held in the name of one or more consumers through which consumers are able to place funds, withdraw cash and execute and receive payment transactions to and from third parties, including the execution of credit transfers, but does not include any of the following types of account provided that the account is not used for day-to-day payment transactions: savings accounts; credit card accounts where funds are usually paid in for the sole purpose of repaying a credit card debt; current account mortgages or e-money accounts”. The FCA has issued guidance on this definition: see ‘FG16/6 – Payment Accounts Regulations 2015’.

    [Note:https://www.fca.org.uk/publications/finalised-guidance/fg16-6-payment-accounts-regulations-2015-definition-payment-account]

  2. (2)

    The definition of “personal current account” for the purposes of this chapter is different to that used in BCOBS 7, because “premium service accounts” as defined in BCOBS 7 are not excluded from the definition of a personal current account in this chapter.

Purpose

BCOBS 8.1.3 G

1 2This chapter requires a firm to:

  1. (1)

    make available a cost calculator tool on its website or mobile telephone application in accordance with BCOBS 8.2;

  2. (2)

    make available an overdraft eligibility tool on its website or mobile telephone application in accordance with BCOBS 8.3; and

  3. (3)

    provide alerts to personal current account banking customers about their personal current account usage in accordance with BCOBS 8.4.

Who and what?

BCOBS 8.1.4 R
  1. (1)

    12This chapter applies to a firm that provides or offers to provide personal current accounts with respect to the provision of retail banking services, arranged overdrafts and unarranged overdrafts in connection with those accounts.

  2. (2)

    This chapter does not apply to a firm if all personal current accounts provided or offered by the firm are excluded accounts.

  3. (3)

    This chapter does not apply to a private bank.

  4. (4)

    This chapter does not apply in relation to an account which may be used for a currency other than a currency of the United Kingdom.3

BCOBS 8.1.5 G
  1. (1)

    12In accordance with BCOBS 1.1.5R this chapter does not apply to a credit union.

  2. (2)

    BCOBS 8.3 (overdraft eligibility tool) applies:

    1. (a)

      to a firm in relation to a trading name if 70,000 or more personal current accounts are held with the firm under that trading name, unless all personal current accounts provided or offered by the firm under that trading name are excluded accounts; and

    2. (b)

      to any other firm to which this chapter applies and that chooses to offer an overdraft eligibility tool.

  3. (3)

    BCOBS 8.4 (Alerts) applies to a firm in relation to a trading name if 70,000 or more personal current accounts are held with the firm under that trading name.

  4. (4)

    BCOBS 8.4 (Alerts) continues to apply to a firm in relation to some personal current accounts if the number of personal current accounts held with the firm falls below 70,000 but the firm has previously informed customers they will receive alerts, in accordance with BCOBS 8.4.6R.

Where?

BCOBS 8.1.6 G

1 2 BCOBS applies only to the activity of accepting deposits from banking customers carried on from an establishment maintained by a firm in the United Kingdom, and activities connected with that activity (see BCOBS 1.1.1R). This chapter does not therefore apply to activities carried on from branches outside the United Kingdom.

BCOBS 8.2 Cost calculator

Application

BCOBS 8.2.1 R

1 2This section applies to a firm that provides or offers to provide personal current accounts unless all personal current accounts provided or offered by the firm are excluded accounts.

BCOBS 8.2.2 G

1 2In accordance with BCOBS 1.1.5R this chapter does not apply to a credit union.

Requirement to provide a cost calculator tool

BCOBS 8.2.3 R
  1. (1)

    12A firm must make publicly available a tool that enables a banking customer or potential banking customer to easily calculate the cost of overdrawing on personal current accounts other than excluded accounts offered by the firm (a “cost calculator”).

  2. (2)

    The cost calculator must be made available continuously on the website of each trading name under which the firm offers or provides personal current accounts other than excluded accounts in a prominent and easily accessible location, except in the circumstances provided for in (3).

  3. (3)

    A firm that offers personal current account opening services exclusively through a mobile telephone application may instead make the cost calculator required under this rule available through that mobile telephone application, but must refer prominently on its website to the availability of the tool through that application.

  4. (4)

    A firm should choose how and where to make the cost calculator available so as to be consistent with how it ordinarily communicates with its customers and select a method most likely to come to the attention of its customers and potential customers.

  5. (5)

    The cost calculator or the reference to it must be published on the firm’s website alongside the information required to be published under BCOBS 4.4.12R.

  6. (6)

    The cost calculator for each trading name must cover the costs of overdrawing on:

    1. (a)

      each of the personal current account products offered under that trading name to banking customers seeking to open a new current account; and

    2. (b)

      any other personal current accounts no longer offered under that trading name but that continue to be held by banking customers of the firm under that trading name.

BCOBS 8.2.4 R
  1. (1)

    12The cost calculator must allow the banking customer to easily input or select from an appropriate and representative range:

    1. (a)

      an amount borrowed;

    2. (b)

      a number of days for which the amount is to be borrowed; and

    3. (c)

      (where the terms relating to different personal current accounts offered by the firm under a particular trading name would result in different outputs from the cost calculator) the particular type of personal current account the banking customer wants to model.

  2. (2)

    The cost calculator must allow the banking customer to choose to:

    1. (a)

      select whether the amount is to be borrowed under an authorised non-business overdraft agreement or without prior arrangement; and

    2. (b)

      alternatively, input an arranged overdraft limit and input an amount borrowed that exceeds that limit.

  3. (3)

    The cost calculator must automatically output the following information:

    1. (a)

      confirmation of the amount and duration of borrowing the calculation is based on;

    2. (b)

      the total sum (rounded to the nearest £0.01) of interest and charges that the banking customer would incur if they overdrew by the amount selected for the duration selected; and

    3. (c)

      (where the borrowing includes both borrowing under an authorised non-business overdraft agreement and borrowing without prior arrangement) the sum of the charges referred to in (b) that relate to borrowing under an unarranged overdraft (rounded to the nearest £0.01).

  4. (4)

    A firm must not require a banking customer to input information other than that set out in (1) and (2) to obtain an output from the cost calculator unless that additional information is necessary to enable the firm to calculate the outputs required by (3), having regard to the assumptions required to be made under BCOBS 8.2.6R.

  5. (5)

    A firm whose cost calculator requires additional information in accordance with (4) must provide clear explanations that are readily accessible from the cost calculator about how to ascertain the additional details required.

BCOBS 8.2.5 G
  1. (1)

    12A firm should ensure that the range of inputs available to a banking customer for the amount borrowed and the length of borrowing is representative of the range of borrowing amounts and durations that arise in practice under arranged overdrafts and unarranged overdrafts on the personal current account product in question.

  2. (2)

    The cost calculator should clearly communicate any limitations to the valid range of inputs.

  3. (3)

    A firm is not required to provide a continuous range of inputs for either the amount borrowed or the length of borrowing. If a firm chooses not to provide a continuous range of inputs it should ensure that it makes available sufficiently granular options that are representative of the borrowing amounts and durations that arise in practice under arranged overdrafts and unarranged overdrafts on the personal current account product in question.

  4. (4)

    A firm has flexibility as to the presentation of the cost calculator and the method or methods of input selected. When designing the cost calculator, a firm should have regard to the ease with which a banking customer can use the tool. For example, a sliding horizontal bar is likely to be more easily accessible than a drop-down menu holding a large number of options.

  5. (5)

    The outputs of the cost calculator should include the amounts of any interest or charges incurred in respect of the period even where those charges do not become due for payment until after the end of the period.

  6. (6)

    The outputs of the cost calculator should not include the amounts of any charges payable by the banking customer for the operation of the personal current account whether or not the banking customer is overdrawn.

Assumptions

BCOBS 8.2.6 R
  1. (1)

    12For the purpose of arriving at the output of the cost calculator, a firm must assume that:

    1. (a)

      the amount borrowed is drawn down in full at noon on the date of calculation;

    2. (b)

      the period specified by the user is a continuous period starting at noon on the date of calculation;

    3. (c)

      at the time the borrowing is drawn down, the balance of the personal current account is £0.00;

    4. (d)

      no credits will be made to the account during the period;

    5. (e)

      any charges and interest relating to the borrowing being modelled will be debited from the account in accordance with the terms and conditions of the personal current account and will not be waived;

    6. (f)

      no other debits will be made from the account during the period;

    7. (g)

      the outstanding balance of capital, interest and other charges will be repaid in full at noon on the last day of the period;

    8. (h)

      in the case of an authorised non-business overdraft agreement allowing variations in:

      1. (i)

        the rate of interest; or

      2. (ii)

        any other charge,

      unless any variation can be quantified at the time of calculation, it must be assumed that these will remain unchanged during the period; and

    9. (i)

      (in so far as the terms of the personal current account allow for a monthly or other periodic charging period that will or may influence the charges required to be calculated):

      1. (i)

        (where the start date of the period may vary between banking customers) that the cost calculator is being used on the first day of any such period; or

      2. (ii)

        (in any other case) that the banking customer has not previously overdrawn the personal current account during that periodic charging period.

  2. (2)

    Where a firm determines the rate of interest or level of other charges that apply to an agreement with a banking customer on a case-by-case basis by reference to specific features of the individual application, the cost calculator tool is not required to collect or take into account all of the customer-specific information that the firm would need to make that determination.

  3. (3)

    If, in the circumstances described in (2), the cost calculator does not collect all of the information that the firm would need to determine the actual rate of interest or level of other charges that would apply:

    1. (a)

      the firm may allow a banking customer who is an existing customer of the firm to select or input the actual interest rate or level of other charges that applies to their existing agreement if it is for a product that is the same or comparable to the one selected for the purpose of the calculation; and

    2. (b)

      the firm must otherwise base the cost calculation on an interest rate or level of other charges that is no more favourable to the customer than the terms the firm reasonably expects to offer to 51% of banking customers applying for the relevant personal current account.

BCOBS 8.3 Eligibility tool

Application

BCOBS 8.3.1 R
  1. (1)

    12This section, apart from BCOBS 8.3.2R, applies to a firm in relation to a trading name if:

    1. (a)

      70,000 or more personal current accounts are held with the firm under that trading name; and

    2. (b)

      the firm offers personal current accounts other than excluded accounts under that trading name.

  2. (2)

    BCOBS 8.3.2R applies to a firm that this chapter applies to: see BCOBS 8.1.4R, BCOBS 8.1.5G and BCOBS 8.1.6G.

BCOBS 8.3.2 R

1 2A firm must not publish a tool that purports to perform the function of an eligibility tool as described in BCOBS 8.3.3R(1) unless the firm complies with the rules in this section as though the firm were a firm to which this section (apart from this rule) applied in respect of that tool.

Publishing an eligibility tool for arranged overdrafts

BCOBS 8.3.3 R
  1. (1)

    12A firm must make available a tool that enables a potential banking customer to obtain an indication tailored to the individual circumstances of that banking customer of the likelihood that the firm would offer an arranged overdraft of a particular amount to that banking customer if the banking customer opened a personal current account with the firm (“the eligibility tool”):

    1. (a)

      for each trading name to which this section applies; and

    2. (b)

      beginning on the day one year after the first time 70,000 or more personal current accounts are held with the firm under that trading name.

  2. (2)

    A firm must make the eligibility tool available continuously and in an easily accessible location on the website for each trading name in respect of which this section applies except in the circumstances provided for in (3).

  3. (3)

    A firm that offers personal current account opening services exclusively through a mobile telephone application may instead make the eligibility tool required under this rule available through that mobile telephone application, but must refer prominently on its website to the availability of the tool through that application.

  4. (4)

    A firm should choose how and where to make the eligibility tool available so as to be consistent with how the firm ordinarily communicates with its customers and select a method most likely to come to the attention of its customers and potential customers.

  5. (5)

    The eligibility calculator or the reference to it must be published on the firm’s website alongside the information required to be published under BCOBS 4.4.12R.

  6. (6)

    A firm must either:

    1. (a)

      present the eligibility tool together with the cost calculator required under BCOBS 8.2; or

    2. (b)

      include in close proximity to the eligibility tool a prominent indication of the existence of the cost calculator required under BCOBS 8.2 and a link enabling a banking customer to access that cost calculator.

BCOBS 8.3.4 R

1 2The eligibility tool must be accompanied by a prominent statement that:

  1. (1)

    the output of the eligibility tool is dependent on the accuracy of the information input by the banking customer;

  2. (2)

    the output of the eligibility tool is indicative only and does not guarantee that the banking customer will be offered an arranged overdraft of the amount selected or at all;

  3. (3)

    any overdraft offered by the firm will depend upon a full eligibility assessment that may affect whether the banking customer is able to obtain an arranged overdraft and of what amount; and

  4. (4)

    use of the eligibility tool will not adversely affect the banking customer’s credit file.

Inputs to the eligibility tool

BCOBS 8.3.5 R
  1. (1)

    12The eligibility tool must allow the banking customer to input or select the level of arranged overdraft that the banking customer wants to obtain an indication of likelihood of eligibility for.

  2. (2)

    The eligibility tool may require the banking customer to:

    1. (a)

      input such personal details as the firm specifies; and

    2. (b)

      consent to the firm conducting a credit reference agency search in respect of the banking customer of a kind that will not leave evidence of an application on the banking customer’s credit file.

  3. (3)

    The eligibility tool must enable a banking customer to assess eligibility for different overdraft amounts on the same occasion without re-entering other information.

  4. (4)

    The eligibility tool may limit the amount that can be entered under (1). Any limit imposed by the tool must be no lower than:

    1. (a)

      £5,000; or

    2. (b)

      (if lower) the largest credit limit that the firm is willing to offer to any banking customer by way of arranged overdraft associated with a personal current account.

BCOBS 8.3.6 G
  1. (1)

    12A firm is not required to provide a continuous range of inputs for the level of arranged overdraft that the banking customer wants to obtain an indication of likelihood of eligibility for. If a firm chooses not to provide a continuous range of inputs it should ensure that it makes available sufficiently granular options that are representative of the levels of arranged overdraft that it offers in practice.

  2. (2)

    A firm that chooses to limit the amount that can be entered under BCOBS 8.3.5R(1) should make clear to banking customers whether that amount represents the maximum overdraft they may be eligible for and, if not, whether and how the banking customer can find out about their eligibility for a greater overdraft amount.

BCOBS 8.3.7 R

1 2A firm must not, without the banking customer’s consent, use the information input into the eligibility tool by the banking customer for any purpose other than:

  1. (1)

    generating the output of the eligibility calculator;

  2. (2)

    monitoring the accuracy of the eligibility calculator; or

  3. (3)

    monitoring, preventing and detecting financial crime.

Outputs of the eligibility tool

BCOBS 8.3.8 R

1 2The output of the eligibility tool must be provided promptly and must:

  1. (1)

    represent a reasonable estimate by the firm of the probability that it would offer the banking customer an overdraft of the amount selected if the banking customer were to apply for it; and

  2. (2)

    be communicated in a clear, fair and not misleading way.

BCOBS 8.3.9 G
  1. (1)

    12A firm may choose how to present the output of the eligibility tool, provided the format chosen is fair, clear and not misleading. For example, the output may be given as a percentage, a qualitative description or graphical representation.

  2. (2)

    The output should adequately represent the range of likelihood of approval. In particular any graphical representation suggesting a spectrum of likelihood of approval, such as a dial or an indicator along a bar, should represent the full range of likelihoods of approval ranging from certain refusal to certain acceptance, even if in practice no banking customer will fall at either extreme of the scale.

  3. (3)

    The probability of a banking customer being offered an overdraft should be assessed having regard to the proportion of banking customers who are similar to the banking customer by reference to the factors assessed by the eligibility tool whom the firm reasonably expects would be offered an arranged overdraft of the amount selected.

Design and monitoring of the eligibility tool

BCOBS 8.3.10 R
  1. (1)

    12A firm must have regard to its process for approving an overdraft for a banking customer when selecting the factors considered and process used by the eligibility tool to produce its output, but it is not required to duplicate that process.

  2. (2)

    A firm’s eligibility tool must use only factors that:

    1. (a)

      could have a significant impact on:

      1. (i)

        the likelihood of the firm approving a banking customer for an arranged overdraft; or

      2. (ii)

        the amount of arranged overdraft approved;

    2. (b)

      can be assessed in an automatic manner; and

    3. (c)

      can be assessed based on information that:

      1. (i)

        is readily available to the banking customer and proportionate to require prior to a full application being made;

      2. (ii)

        is readily available to the firm; or

      3. (iii)

        the firm can readily obtain by conducting a credit reference agency search in respect of the banking customer of a kind that does not leave evidence of an application on the banking customer’s credit file.

  3. (3)

    A firm should select the information it requires a banking customer to provide when using the eligibility tool, and the factors considered and process used by the eligibility tool to produce its output so as to achieve a proportionate balance between:

    1. (a)

      the accuracy of the output of the tool; and

    2. (b)

      the amount of information a banking customer is required to input.

  4. (4)

    A firm is not required to verify the accuracy of any information input by the banking customer into the eligibility tool.

BCOBS 8.3.11 G
  1. (1)

    12A firm should approach the task of designing the eligibility tool in a proportionate, balanced and practical way so as to maximise the eligibility tool’s utility to the banking customers who use it. A firm is not required to analyse every possible factor to produce the output of the eligibility tool.

  2. (2)

    A firm should only seek information from the banking customer or a credit reference agency where this is likely to have a significant impact on the likelihood of the banking customer being offered an arranged overdraft or on the amount of arranged overdraft offered to the banking customer.

  3. (3)

    A firm should have regard to the fact that the banking customer may be using the eligibility tool to compare a number of providers and should avoid, where practical, requesting detailed information to an extent that is likely to discourage a banking customer from using the eligibility tool. A firm should consider whether less comprehensive information would be more appropriate for the purposes of the eligibility tool. For example, a banking customer is likely to be able to readily confirm their employment status or total income, but requiring a detailed breakdown of income and expenditure is likely to be disproportionate.

BCOBS 8.3.12 R
  1. (1)

    12A firm must establish a process for monitoring the accuracy of the output of the eligibility tool.

  2. (2)

    A firm must review the factors considered and process used by the eligibility tool to produce its output whenever:

    1. (a)

      there is a material change to the firm’s policies or processes for approving an overdraft; or

    2. (b)

      the firm’s monitoring of the eligibility tool reveals that the eligibility tool’s outputs deviate to a significant degree from those expected.

BCOBS 8.3.13 G

1 2Examples of processes a firm could use to comply with BCOBS 8.3.12R(1) include:

  1. (1)

    periodically comparing the outcomes of samples of actual overdraft decisions with the outputs the tool would have generated for those banking customers; and

  2. (2)

    periodically sampling banking customers who used the tool and subsequently applied for a personal current account to assess whether approval decisions correspond to those expected if the tool was accurate.

BCOBS 8.4 Alerts

Application

BCOBS 8.4.1 R
  1. (1)

    23Subject to BCOBS 8.4.2R this section applies to a firm in relation to personal current accounts held with the firm under a trading name if 70,000 or more personal current accounts are held with the firm under that trading name.

  2. (2)

    This section does not apply to excluded personal current accounts.

BCOBS 8.4.2 R

2 3Where a firm has notified a banking customer in accordance with BCOBS 8.4.6R that they will receive alerts under this section in respect of a personal current account, this section continues to apply to the firm in respect of that personal current account, even if it would not apply to the firm under BCOBS 8.4.1R, until:

  1. (1)

    the firm has notified the banking customer in writing that they will no longer receive the alerts they were previously notified of; and

  2. (2)

    28 days have elapsed since the firm sent the notification.

Automatic enrolment

BCOBS 8.4.3 R
  1. (1)

    23Except as otherwise provided for in BCOBS 8.4.5R, a firm must ensure that in relation to each personal current account held by a banking customer, the banking customer is, by the date specified in (2), enrolled to receive:

    1. (a)

      arranged overdraft alerts in accordance with BCOBS 8.4.12R;

    2. (b)

      unarranged overdraft alerts in accordance with BCOBS 8.4.13R;

    3. (c)

      attempt to overdraw without prior arrangement alerts in accordance with BCOBS 8.4.15R; and

    4. (d)

      where BCOBS 8.4.16R applies, the additional alerts required under that rule.

  2. (2)

    A banking customer is enrolled to receive alerts in relation to a personal current account when:

    1. (a)

      the firm has put in place arrangements that enable it to comply with this section; and

    2. (b)

      those arrangements are operational in respect of that personal current account.

  3. (3)

    Where a personal current account is held by two or more banking customers jointly, a firm must enrol each banking customer in the alerts required under this section.

  4. (4)

    A firm must comply with (1) not later than whichever is the latest of:

    1. (a)

      the day one year after the first time that 70,000 or more personal current accounts are held with the firm under that trading name;

    2. (b)

      three working days after the agreement for the personal current account is concluded;

    3. (c)

      where BCOBS 8.4.4R(1) applies, ten working days after:

      1. (i)

        the firm obtains a mobile telephone number from the banking customer; or

      2. (ii)

        if the firm provides alerts by push notification from a mobile banking application, the banking customer is able to receive alerts in this way; and

    4. (d)

      where a personal current account had no arranged overdraft at the time it was opened (and BCOBS 8.4.5R(2) therefore applied at that time) and an arranged overdraft was subsequently agreed in relation to that personal current account, three working days after the agreement for the arranged overdraft is concluded.

BCOBS 8.4.4 R
  1. (1)

    23Where a firm is required to enrol a banking customer in alerts under this section but the firm:

    1. (a)

      does not hold a mobile telephone number for the banking customer; or

    2. (b)

      has reasonable grounds to believe that the mobile telephone number held in respect of the banking customer is no longer used by the banking customer;

    the firm must take reasonable steps to obtain a mobile telephone number to which alerts may be sent to that banking customer within a reasonable time.

  2. (2)

    Before opening a new personal current account, a firm must:

    1. (a)

      take reasonable steps to obtain the banking customer’s mobile telephone number for the purposes of enrolling them in alerts relating to that personal current account; or

    2. (b)

      where the firm already holds a mobile telephone number for the banking customer, seek the banking customer’s confirmation that the mobile telephone number held by the firm is the banking customer’s preferred mobile telephone number for the purposes of receiving alerts relating to that personal current account.

  3. (3)

    Where a banking customer declines to provide or confirm a mobile telephone number when requested to do so under (1) or (2) the firm must warn the banking customer that they will not be able to receive alerts about their overdraft use and as a result may incur avoidable charges.

  4. (4)

    This rule does not apply if:

    1. (a)

      the firm provides alerts by push notification from a mobile banking application and the banking customer is able to receive alerts in this way; or

    2. (b)

      the banking customer has elected to receive alerts in respect of that personal current account by an alternative means in accordance with BCOBS 8.4.8R(3).

Exceptions to automatic enrolment

BCOBS 8.4.5 R
  1. (1)

    23A firm is not required to enrol a banking customer to receive alerts under BCOBS 8.4.3R in the circumstances set out in (2) to (4).

  2. (2)

    A firm is not required to enrol a banking customer to receive arranged overdraft alerts in accordance with BCOBS 8.4.12R in respect of a personal current account that has no arranged overdraft.

  3. (3)

    A firm is not required to enrol a banking customer to receive a particular type of alert in respect of a personal current account if that banking customer already receives an alert or alerts that perform at least an equivalent function.

  4. (4)

    A firm may elect not5 to enrol a banking customer to receive alerts5 in respect of a personal current account if that banking customer has 5requested not to receive an alert or alerts relating to that banking customer’s overdraft usage.5

  5. (5)

    For the purposes of (4), a banking customer is not to be treated as having requested not to receive an alert merely because it has been previously offered to them.

Notification of enrolment

BCOBS 8.4.6 R
  1. (1)

    23A firm must notify a banking customer who has been (or will be) enrolled to receive alerts that they have been (or will be) so enrolled.

  2. (2)

    When giving such notification the firm must also inform the banking customer of any options available to customise the alerts the banking customer receives to suit the banking customer’s needs and the method or methods available for doing so.

BCOBS 8.4.7 G

2 3A firm that has complied with BCOBS 4.4.4R when opening the personal current account will have complied with BCOBS 8.4.6R and need not provide a further notification to the banking customer.

Method for delivering alerts

BCOBS 8.4.8 R

2 3A reference in this section to an alert being sent in respect of a personal current account is to the firm completing all steps necessary to initiate the sending of an alert:

  1. (1)

    by SMS text message to the banking customer’s mobile telephone number;

  2. (2)

    by push notification from a mobile banking application; or

  3. (3)

    by an alternative method if:

    1. (a)

      that method provides for secure and reliable receipt by the banking customer in a comparable timeframe from the point when the firm sends the alert to the methods provided for in (1) or (2); and

    2. (b)

      the banking customer has expressly and freely opted to receive alerts by way of such delivery method instead of the methods provided for in (1) or (2).

BCOBS 8.4.9 G

2 3An ‘opt-out’ or pre-filled check box to receive alerts by an alternative method would not satisfy the requirement in BCOBS 8.4.8R(3)(b) for the banking customer to have expressly and freely opted to receive alerts by an alternative method.

Customising alerts

BCOBS 8.4.10 R
  1. (1)

    213A firm must put in place arrangements that allow a banking customer to choose not to receive the alerts required by BCOBS 8.4.12R, BCOBS 8.4.13R and BCOBS 8.4.16R.

  2. (2)

    A firm may restrict a banking customer’s ability to choose not to receive the alerts required by BCOBS 8.4.13R so that the banking customer can choose not to receive those alerts only if they also choose not to receive alerts under BCOBS 8.4.15R.

  3. (3)

    A firm must ensure that any arrangements put in place for banking customers to choose not to receive alerts, or to otherwise customise alerts, are easily accessible free of charge, clear and straightforward.

  4. (4)

    A firm must warn a banking customer who chooses not to receive some or all alerts that they will not receive alerts about their overdraft use and as a result may incur avoidable charges.

BCOBS 8.4.11 G
  1. (1)

    23BCOBS 8.4.10R does not prevent a firm from allowing a banking customer to customise alerts in additional ways to that required by that rule.

  2. (2)

    The effect of BCOBS 8.4.10R(1) and (2) is that a firm:

    1. (a)

      need not allow a banking customer to opt out of receiving attempt to overdraw without prior arrangement alerts; and

    2. (b)

      may offer a combined opt out for attempt to overdraw without prior arrangement alerts and unarranged overdraft alerts, and not offer an independent opt out for each of these alerts.

    A banking customer should be able to opt out of arranged overdraft alerts, or any additional alerts required under BCOBS 8.4.16R, regardless of the other alerts the banking customer chooses to receive.

  3. (3)

    Nothing in this section prohibits a firm from offering alerts additional to those required by this section, such as alerts sent when:

    1. (a)

      the balance of the personal current account is low;

    2. (b)

      the personal current account approaches the applicable overdraft limit; or

    3. (c)

      there are insufficient funds to process a transaction at a particular time but the firm will attempt to process the transaction again.

  4. (4)

    A firm that provides alerts by push notification from a mobile banking application should take reasonable steps to enable it to detect circumstances where a banking customer has disabled push notifications, including otherwise than through the banking application, so as to enable it to either:

    1. (a)

      continue to provide alerts by an alternative permitted method; or

    2. (b)

      comply with BCOBS 8.4.10R(4).

  5. (5)

    A firm should continue to send the alerts required by the rules in this section unless the banking customer chooses not to receive them. If the firm is dealing with a banking customer who is in financial difficulty, in default, or otherwise vulnerable the firm may discuss with the banking customer whether they wish to continue receiving alerts under the rules in this section, but the choice of whether to do so should remain with the banking customer.

Arranged overdraft alerts

BCOBS 8.4.12 R
  1. (1)

    23A firm must send an alert to a banking customer if the firm:

    1. (a)

      knows based on information available to it that the banking customer’s personal current account is making use of arranged overdraft; or

    2. (b)

      is reasonably able to determine that, taking into account information it has access to on transactions due to be settled, the banking customer’s personal current account will make use of arranged overdraft that day in the absence of:

      1. (i)

        action by the banking customer; or

      2. (ii)

        a transaction other than those the firm is aware of.

  2. (2)

    The alert must communicate to the banking customer in plain simple language:

    1. (a)

      the reason why the alert has been sent;

    2. (b)

      that the banking customer will or may incur charges if they become or remain overdrawn, if this is the case.

Unarranged overdraft alerts

BCOBS 8.4.13 R
  1. (1)

    23A firm must send an alert to a banking customer if the firm:

    1. (a)

      knows based on information available to it that the banking customer’s personal current account has entered unarranged overdraft;

    2. (b)

      is reasonably able to determine that, taking into account information it has access to on transactions due to be settled, the banking customer’s personal current account will enter unarranged overdraft in the absence of:

      1. (i)

        action by the banking customer; or

      2. (ii)

        a transaction other than those the firm is aware of.

  2. (2)

    The alert must communicate to the banking customer in plain simple language:

    1. (a)

      the reason why the alert has been sent;

    2. (b)

      that the banking customer will or may incur charges if they enter or remain in unarranged overdraft, if this is the case; and

    3. (c)

      that the banking customer has a period of time during which they have an opportunity to take action to avoid or reduce charges, and specify:

      1. (i)

        the actions which may be taken; and

      2. (ii)

        the time by which the customer must take such action to reduce or avoid the charge or charges.

BCOBS 8.4.14 G
  1. (1)

    23The period communicated under BCOBS 8.2.13R(2)(c) should give the banking customer as good an opportunity to take action to avoid or reduce charges as possible, having regard to:

    1. (a)

      the time when the alert is required to be sent;

    2. (b)

      the terms and conditions applicable to the personal current account; and

    3. (c)

      the firm’s obligations under:

      1. (i)

        the Payment Services Regulations; and

      2. (ii)

        BCOBS 5.1.1R.

  2. (2)

    Firms should keep in mind regulation 89 of the Payment Services Regulations (Value date and availability of funds). Where it applies, the alert must reflect that, if a payment is made in response to an alert and credited to the firm’s account, the firm must give value for the payment on the same business day (as defined in the Payment Services Regulations) no matter how late in the business day the payment is credited to the firm’s account.

    [Note: Guidance on the concept of a business day is available in the FCA’s Approach to Payment Services and Electronic Money document: https://www.fca.org.uk/publication/finalised-guidance/fca-approach-payment-services-electronic-money-2017.pdf]

Attempt to exceed alerts

BCOBS 8.4.15 R
  1. (1)

    23A firm must send an alert to a banking customer if the firm:

    1. (a)

      knows based on information available to it that the banking customer has incurred a charge for attempting to enter unarranged overdraft but has not entered unarranged overdraft because the firm declined to process the transaction; or

    2. (b)

      is reasonably able to determine that, taking into account information it has access to on transactions due to be settled, a situation described in (a) will occur that day in the absence of:

      1. (i)

        action by the banking customer; or

      2. (ii)

        a transaction other than those the firm is aware of.

  2. (2)

    The alert must communicate to the banking customer in plain simple language:

    1. (a)

      the reason why the alert has been sent; and

    2. (b)

      that the banking customer has incurred or may incur charges, if this is the case.

Additional alerts where there are multiple arranged overdraft limits

BCOBS 8.4.16 R
  1. (1)

    23This rule applies to a firm in relation to an authorised non-business overdraft agreement where the terms of that agreement provide for very significantly different levels of charge for credit in respect of different tiers of drawdown under the facility, other than where one of the tiers is free of charge.

  2. (2)

    Where this rule applies, the firm must send an alert to the banking customer if the firm:

    1. (a)

      knows based on information available to it that the banking customer’s personal current account has entered a different tier of drawdown under the facility where very significant additional costs are associated with that tier of drawdown; or

    2. (b)

      is reasonably able to determine that, taking into account information it has access to on transactions due to be settled, the circumstances in (a) will occur that day in the absence of:

      1. (i)

        action by the banking customer; or

      2. (ii)

        a transaction other than those the firm is aware of.

  3. (3)

    The alert must communicate to the banking customer in plain simple language:

    1. (a)

      the reason why the alert has been sent;

    2. (b)

      that the banking customer has incurred or may incur charges; and

    3. (c)

      that the banking customer has a period of time during which they have an opportunity to take action to avoid or reduce charges, and specify:

      1. (i)

        the actions which may be taken; and

      2. (ii)

        the time by which the banking customer must take such action to reduce or avoid the charge or charges.

General provisions about the timing and content of alerts

BCOBS 8.4.17 R

2 3Where a firm has sent an alert under BCOBS 8.4.12R to 8.4.16R it is not required to send a further alert in respect of the same personal current account under the same rule unless, since the last alert under that rule was sent:

  1. (1)

    in respect of alerts sent under BCOBS 8.4.12R(1)(a), any arranged overdrawing has been repaid;

  2. (2)

    in respect of alerts sent under BCOBS 8.4.12R(1)(b), either:

    1. (a)

      the personal current account did not enter arranged overdraft on the day the alert was sent; or

    2. (b)

      the personal current account entered arranged overdraft but any arranged overdrawing has been repaid;

  3. (3)

    in respect of alerts sent under BCOBS 8.4.13R(1)(a), any unarranged overdrawing has been repaid;

  4. (4)

    in respect of alerts sent under BCOBS 8.4.13R(1)(b), either:

    1. (a)

      the personal current account did not enter unarranged overdraft on the day the alert was sent; or

    2. (b)

      the personal current account entered unarranged overdraft but any unarranged overdrawing has been repaid; or

  5. (5)

    in respect of alerts sent under BCOBS 8.4.15R, the obligation to send the alert arises because of a further attempt to enter unarranged overdraft;

  6. (6)

    in respect of alerts sent under BCOBS 8.4.16R(2)(a), any arranged overdrawing within the tier of drawdown that significant additional costs are associated with has been repaid; and

  7. (7)

    in respect of alerts sent under BCOBS 8.4.16R(2)(b), either

    1. (a)

      the personal current account did not enter the tier of drawdown that significant additional costs are associated with on the day the alert was sent; or

    2. (b)

      the personal current account entered that tier of drawdown but any arranged overdrawing within that tier has been repaid.

BCOBS 8.4.18 R
  1. (1)

    23Subject to (2) to (4), a firm must send an alert required by this section as soon as practicable after the circumstances giving rise to the obligation to send the alert arise.

  2. (2)

    Where the obligation to send an alert or alerts is brought about by one or more scheduled payments, the firm must:

    1. (a)

      where the alert is required under BCOBS 8.4.13R or BCOBS 8.4.15R, send an alert no later than 10:00 am on the day when the obligation to send the alert arises;

    2. (b)

      where the alert is required under BCOBS 8.4.12R or BCOBS 8.4.16R, send an alert no later than 12:00 midday on the day when the obligation to send the alert arises; and

    3. (c)

      treat all scheduled payments due to be debited from the personal current account on a single day as a single transaction for the purposes of (3).

  3. (3)

    Where a transaction would, apart from this paragraph, give rise to an obligation to send multiple alerts under different rules in this section, a firm must only send the alert most relevant to the anticipated final balance of the personal current account after the transaction.

  4. (4)

    Where a series of transactions that the firm becomes aware of in rapid succession would, apart from this paragraph, give rise to an obligation to send multiple alerts under different rules in this section, a firm may treat them as a single transaction for the purposes of (3).

  5. (5)

    Nothing in this section requires a firm to send an alert where doing so would be a breach of another regulatory requirement applicable to the firm.

  6. (6)

    In this rule, a “scheduled payment” is a payment where the firm has knowledge of both the amount and date of the payment on the day before it is to be debited from the personal current account.

BCOBS 8.4.19 G
  1. (1)

    23The purpose of the alerts in this section is to give banking customers notice of potential and actual arranged and unarranged overdraft use to enable them to:

    1. (a)

      take informed decisions about their personal current account use; and

    2. (b)

      where possible, take action to avoid such use if it is not in their interests.

  2. (2)

    The rules in this section leave scope for firms to customise alerts to suit the method used to send them, the firm’s products, brands and customers.

  3. (3)

    The content required by the rules in this section is minimum content and firms may choose to include additional content in the alerts including information about:

    1. (a)

      the balance of the personal current account;

    2. (b)

      the banking customer’s pre-arranged overdraft limit; and

    3. (c)

      the amounts of charges that the banking customer will or may incur.

  4. (4)

    Certain accounts provide for arranged or unarranged borrowing to be free of charge in limited circumstances, or for certain amounts. This is a situation where the customer ‘may be charged’ for their overdraft use. Where this is the case, a firm that is required under the rules in this section to inform a banking customer that they will or may be charged should take care that the alert is fair, clear, and not misleading. In particular where the borrowing does not give rise to a charge the firm may:

    1. (a)

      inform the banking customer that they may be charged;

    2. (b)

      inform the banking customer that they will not be charged in the circumstances that have triggered the alert and set out the circumstances in which the banking customer may be charged in the future; or

    3. (c)

      where the firm has put in place arrangements to provide a further alert to the banking customer if a charge arises in the future:

      1. (i)

        make no reference to charges in the alert; or

      2. (ii)

        inform the banking customer that they will not be charged based on the usage that has triggered the alert.

  5. (5)

    Firms should have regard to available evidence about the content and presentation that is most effective at engaging banking customers when designing the content and presentation of alerts in compliance with these rules.

  6. (6)

    The requirement to send alerts as soon as practicable in BCOBS 8.4.18R(1) does not preclude a firm from grouping alerts due to be sent to banking customers in ‘batches’, provided that alerts are sent at reasonable intervals.