CONC 5D rules and guidance updated with effect from 4 November 2024

Several rules and guidance items in CONC 5D, the Financial Conduct Authority's chapter on overdraft repeat use, carry an effective date of 4 November 2024, including the purpose, application, monitoring and intervention provisions¹. The chapter sits within the FCA Handbook and was last updated on 26 June 2026¹.

CONC 5D.1.1, the purpose rule, is dated 04/11/2024, as are the application rule CONC 5D.1.3 and the monitoring rule CONC 5D.2.1¹. The chapter's stated purpose is to require firms to monitor customers' patterns of overdraft use, identify customers with patterns of repeat use, and take appropriate steps with the aim of changing such patterns of use¹. "Repeat use" is defined as a pattern of overdraft use where the frequency and depth of use may result in high cumulative charges that are harmful to the customer or indicate that the customer is experiencing or at risk of financial difficulties¹.

The chapter applies to firms in respect of consumer credit lending and connected activities in relation to arranged and unarranged overdrafts associated with personal current accounts¹. It does not apply to a firm if all its personal current accounts are excluded accounts, to accounts that may be used in a currency other than a UK currency, to a private bank, or to a credit union¹. It applies to activities carried on from a UK establishment¹.

Under CONC 5D.2.1, a firm must establish, implement and maintain clear and effective policies, procedures and systems to monitor and review periodically the pattern of drawings and repayments of each customer under an arranged or unarranged overdraft, and to identify as early as possible customers with a pattern of repeat use, sub-dividing them into those showing signs of actual or potential financial difficulties and all other repeat users¹. Guidance states that if a customer has become or remained overdrawn in every month over the preceding 12-month period, it is likely the customer falls within CONC 5D.2.1R(2)(a) or (b)¹.

Where a firm identifies a repeat user who is likely to continue that pattern and does not reasonably consider there are signs of actual or potential financial difficulties, it must communicate with the customer, highlighting the pattern of overdraft use and indicating that the customer should consider whether it is resulting or may result in high avoidable costs¹. The firm must continue to communicate in similar terms or for a similar purpose at least annually until the pattern of use ceases to fall within CONC 5D.2.1R(2)(b)¹. Sub-paragraphs (5)(b) and (6) do not apply if suspending or removing the overdraft facility or reducing the credit limit would cause financial hardship to the customer¹. For the purposes of CONC 5D.3.2R(3), a "reasonable period" is unlikely to be longer than one month¹.

Why it matters for households

The rules govern how banks and other consumer credit lenders with UK personal current accounts must watch for customers who lean on their overdraft repeatedly. A customer who has been overdrawn every month for a year is flagged in the guidance as likely to fall within the repeat use categories¹. Where a firm identifies such a pattern, it must contact the customer about the potential for high avoidable costs, and keep communicating at least annually while the pattern continues¹. The chapter does not apply to credit unions, private banks, accounts in a non-UK currency, or firms whose accounts are all excluded accounts¹.

What happens next

Firms must monitor and periodically review the effectiveness of their policies, procedures and systems under CONC 5D.2.1R and update or adjust them as appropriate¹. A firm must submit a document to the FCA by electronic mail containing a detailed description of the policies, procedures and systems it establishes to comply with CONC 5D.2.1R, CONC 5D.3.2R and CONC 5D.4.1R¹. The first report covers the six-month reporting period beginning on the date the firm becomes subject to CONC 5D, with each report submitted within one month following the end of the relevant six-month period¹. Where a firm proposes to update its policies, procedures and systems, it must submit a report describing any substantial changes¹.