FCA updates CONC 5D rules on identifying repeat overdraft use and supporting customers in financial difficulties

The Financial Conduct Authority (FCA) has updated its rules on overdraft repeat use, with revised provisions in chapter CONC 5D of the FCA Handbook dated 4 November 2024¹. The changes cover the definition of repeat use, which firms the chapter applies to, the obligation to monitor and identify affected customers, and the interventions firms must take¹.

Under CONC 5D.1.1R, dated 4 November 2024, "repeat use" refers to 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 consumer credit lending and connected activities in relation to arranged and unarranged overdrafts associated with personal current accounts¹. It does not apply to firms whose personal current accounts are all excluded accounts, accounts that may be used for a currency other than a UK currency, private banks, or credit unions¹.

CONC 5D.2.1R, also dated 4 November 2024, requires firms to 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, and to identify as early as possible customers showing repeat use, subdividing them into those with signs of actual or potential financial difficulties and all other repeat users¹. The guidance states that if a customer has become or remained overdrawn in every month over the preceding 12-month period, it is likely they will fall into one of those categories, though other patterns over fewer months may also be caught¹.

CONC 5D.3.2R, dated 4 November 2024, sets out the intervention required where a firm identifies a customer with repeat use and signs of actual or potential financial difficulties². The firm must promptly communicate with the customer, encourage them to make contact and explain that doing nothing could make things worse². If the customer does not make contact after a reasonable period, the firm must take reasonable steps to contact them². The guidance states that a "reasonable period" is unlikely to be longer than one month².

CONC 5D.3.4R, dated 4 November 2024, requires that where a firm identifies a forbearance or other support option, it must take all reasonable steps to ensure any measure agreed with the customer is sustainable¹. A measure is unlikely to be sustainable if it has the result that the customer cannot meet their priority debts and essential living expenses¹. Where a firm assesses income and expenditure, it must do so in an objective manner¹.

Why it matters for households

The rules affect people with personal current accounts who use an overdraft repeatedly. From 4 November 2024, firms must monitor account patterns and identify customers whose use may lead to high cumulative charges or indicate financial difficulty¹. Customers identified as showing signs of actual or potential financial difficulties should be contacted promptly, and firms must set out options designed to help reduce overdraft use and address those difficulties². Options may include advice on budgeting and money management, forbearance such as reducing or waiving interest and charges, refinancing, or agreeing staged reductions in the overdraft limit and balance². Firms must explain that failing to engage could lead to suspension or removal of the overdraft facility or a reduction in the credit limit, though these steps do not apply if they would cause financial hardship². Where a Debt Respite moratorium is in effect, a firm complying with it is treating the customer with appropriate forbearance¹.

What happens next

The revised rules took effect on 4 November 2024¹. Firms must monitor and periodically review the effectiveness of their policies, procedures and systems and update or adjust them as appropriate¹. Firms must prepare two reports for the FCA describing the results of the monitoring required¹. The chapter was last updated on 26 June 2026, according to the Handbook¹.