Overdraft repeat use: the FCA rules

If your bank has started writing, texting or calling about your overdraft, it is probably not a marketing message. Since December 2019, rules in the FCA's Consumer Credit sourcebook, in a chapter called CONC 5D, have required banks to watch how customers use their overdrafts, spot those who go overdrawn again and again, and get in touch with the aim of changing that pattern¹. The rules exist because an overdraft used as long-term borrowing can rack up charges that are hard to escape, and because a bank that never intervenes can leave a customer drifting into serious debt.

The chapter's purpose is set out plainly: firms must "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 use"². What those steps look like depends on whether the bank sees signs of financial difficulty. For some customers it means a nudge about avoidable costs; for others it means a conversation about support, which can include reduced or waived charges. This page explains what counts as repeat use, who the rules cover, what your bank must do, and where to turn if it gets it wrong.

What counts as overdraft repeat use

The rules define repeat use 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 difficulties"¹. Two things matter in that definition: how often you go overdrawn, and how deep you go. A customer who dips £20 into the red once a month is in a very different position from one who is at the limit of their overdraft every month with no clear way out.

The definition is deliberately about the pattern, not a single bad month. The FCA's policy work explains why: overdraft facilities cannot be in arrears in the way a loan can, and they do not have fixed repayment requirements, so the usual arrears rules do not fit. The repeat use rules were designed as the equivalent safety net for overdrafts⁶. The charges that count towards the harm are broadly drawn: they capture any charge that arises because you used an overdraft, or that is triggered by, or sized according to, the fact that your account has entered, remains in, or extended a debit position².

One benchmark appears in the FCA's own guidance: if a customer has become or remained overdrawn in every month over the preceding 12-month period, it is likely that the customer falls within the repeat use categories⁴. That is guidance rather than a hard trigger, and banks are expected to design their own indicators, but it gives a sense of the scale of use the rules are aimed at. If you recognise that description in your own account, the rules are probably about you.

The everyday mechanics of overdrafts, including how interest is charged and what an arranged limit means, are covered in overdrafts explained and how overdraft interest and charges work.

Who the rules cover, and which accounts are left out

CONC 5D applies to firms carrying on consumer credit lending in relation to arranged overdrafts and unarranged overdrafts associated with personal current accounts¹. In practice that means the banks and building societies that provide current accounts with overdrafts to individuals in the UK. Both arranged overdrafts, where you have an agreed limit, and unarranged overdrafts, where you go overdrawn or beyond your limit without an agreement, are covered. The difference between the two is explained in arranged vs unarranged overdrafts.

The chapter then carves out exceptions. It does not apply to a firm if all the personal current accounts it provides or offers are excluded accounts, to accounts usable in non-UK currencies, to private banks, or to credit unions¹. An "excluded account" is a personal current account offered on terms where an agreement providing prior authorisation to overdraw cannot arise, where the account cannot become overdrawn without prior arrangement or no charge is payable if it does, and where no charge is payable if the firm refuses a payment for lack of funds². In plain terms: an account that cannot generate overdraft charges does not need overdraft repeat use monitoring.

There is a wider legal backdrop worth knowing. Overdrafts sit oddly in consumer credit law. Parts of the Consumer Credit Act 1974 do not apply to agreements enabling a debtor to overdraw on a current account⁷, and provisions on information and statements do not apply where an account holder overdraws without a pre-arranged overdraft or exceeds their pre-arranged limit⁷. That is part of why the FCA built a dedicated rulebook chapter for overdraft repeat use rather than relying on the Act's general machinery. The FCA has also said that some of the protections in the Act which the government plans to repeal are significant and that it would not be able to replicate them sufficiently, a point worth bearing in mind for anyone relying on consumer credit protections.

Monitoring: banks must spot the pattern themselves

The core duty is on the bank, not on you. 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 customers with a pattern of repeat use⁴. Having set up those systems, the firm must also monitor and periodically review their effectiveness, and update or adjust them as appropriate¹.

Two features of this duty matter to a customer. First, it is per-customer: the bank must look at the pattern of drawings and repayments of each customer, not just at aggregate lending statistics. Second, the FCA has deliberately not prescribed which indicators firms must use. Its stated view is that "firms themselves are best placed to understand their own overdraft lending book", and its rules are not prescriptive about the indicators⁶. That means one bank's repeat use trigger may differ from another's, though all must be capable of catching the patterns the chapter is aimed at.

When a firm does identify repeat users, it must subdivide them into two groups: those with signs of actual or potential financial difficulties, and all other repeat users¹. That split drives everything that follows, because the required response is different for each group. The FCA has also reviewed how firms are doing in practice: it assessed the policies and procedures firms have in place for their overdraft repeat use borrowers, and published its findings as good practice and areas of concern⁸. Where a firm assesses a customer's income and expenditure as part of this work, it must do so in an objective manner, informed by sufficiently detailed information, and it may have regard to the spending guidelines in the Standard Financial Statement or an equivalent tool⁹.

When repeat use signals financial difficulty

The dividing line between the two groups of repeat users is the presence of signs of actual or potential financial difficulties. The rulebook gives a concrete list of features of repeat overdraft use on a personal current account that may signal this, including:

• an upward trend in overdraft use over time
• changes to regular credits or debits
• use of other products indicating a fall in disposable income
• use of an unarranged overdraft
• the incidence of refused payments
• customer information indicating financial difficulties⁴

The FCA has been explicit that the repeat use rules reach anyone showing these signs: "Our repeat use rules apply to any customers who are showing signs of financial strain or are in financial difficulty"¹⁰. So a customer need not be in formal arrears, or have missed payments elsewhere, for the stronger duties to bite. A rising trend in overdraft use, or a growing reliance on unarranged borrowing, is enough to place a customer in the group that needs the fuller intervention described below.

For the customer, this matters because it changes what the bank owes them. A repeat user without signs of difficulty is owed information and prompts. A repeat user with signs of difficulty is owed a prompt attempt to engage, an exploration of the reasons behind the pattern, and a set of options to reduce the overdraft use and provide support⁹. If you are in the second group and the bank treats you as if you were in the first, that is a gap you can point to in a complaint.

What your bank must do when it contacts you

The response required depends on which group you fall into. For a repeat user without signs of financial difficulties, the firm must send a first communication, in an appropriate medium, highlighting the pattern of overdraft use and indicating that the customer should consider whether it is resulting, or may result, in high avoidable costs³. If the pattern continues after a reasonable period, the firm must send a second communication in similar terms, and then continue to communicate at least annually until the pattern ceases¹. For these purposes, the FCA's guidance says a "reasonable period" is unlikely to be longer than one month¹.

For a repeat user with signs of actual or potential financial difficulties, the duties are heavier. The firm must promptly communicate with the customer, encourage them to contact the firm, explore the reasons for the pattern of use, and identify and set out suitable options to reduce overdraft use and provide support¹. The firm must also explain that doing nothing could make things worse, and it must provide contact details for not-for-profit debt advice bodies². The firm must warn that failure to engage may lead to suspension or removal of the overdraft facility or a reduction in the credit limit¹.

The rules also say how the communication should be done. When the intervention rules apply to a customer, a firm should make available timely, clear and understandable information that takes into account the customer's individual circumstances, sufficient for the customer to understand their financial position in relation to their debt, including how it is reported to their credit file, and their options, including the potential impact of any forbearance or support on their overall balance and how it will be reported to the credit file¹. Firms are also reminded of their obligations to communicate in accordance with the Consumer Duty or Principle 7, as applicable⁹. In short: the message should be understandable, personal, and honest about the consequences, including for your credit record.

Support options: budgeting help, reduced charges and waived interest

When a bank engages with a repeat user in difficulty, it has to identify and set out suitable options. The rulebook lists the kinds of options a firm could identify, where assessed as appropriate for the individual customer. They may include:

• advice on budgeting and money management
• forbearance and other support, including reducing or waiving interest and other charges
• refinancing to an alternative credit agreement on more favourable terms
• agreeing staged reductions in the overdraft limit and balance
• a reduction in the credit limit, or suspension or removal of the overdraft facility, where these would not cause financial hardship⁹

MoneyHelper, the government-backed money guidance body, describes the same range from the customer's side: banks might, for example, reduce or waive interest, offer a continuation of overdraft borrowing at the current rate of interest, or agree on a repayment programme, possibly including a personal loan¹¹. The FCA's own work on borrowers in financial difficulty carries the same principle in its guidance to firms: "Firms should not reduce the credit limit, suspend or remove the overdraft facility of a customer if that reduction, suspension or removal would cause financial hardship to the customer"¹².

Two things are worth noticing about this list. First, it runs from the lightest touch, budgeting advice, to the heaviest, removing the facility altogether, and the bank is expected to match the option to the customer rather than jump to the end of the list. Second, the list is not a menu of entitlements: the rules say a firm "could" identify these options where assessed as appropriate. What you can insist on is that the bank assesses and sets out suitable options; what those options turn out to be depends on your circumstances. If you are already at the stage of needing structured help, struggling to repay an overdraft and the debt guide set out the wider options, including free debt advice.

Support must be affordable: the sustainability test

Whatever option the bank identifies, it cannot simply be a gesture. The rules say that where a firm identifies a forbearance or other support option, "the firm must take all reasonable steps to ensure that any measure agreed with the customer is sustainable"¹. A repayment plan that you cannot actually keep, or a staged reduction that leaves you short each month, fails the test.

This sustainability requirement echoes the affordability principles that run through the FCA's consumer credit rules. In the creditworthiness assessment rules, a firm must consider the customer's ability to make repayments as they fall due over the life of the agreement, out of income, joint income, or savings or assets where the customer has clearly indicated an intention to repay using them, without borrowing to meet repayments, without failing other contractual or statutory payments, and without significant adverse impact on the customer's financial situation¹³. The same logic applied to overdraft support means the agreed measure should not require you to borrow elsewhere to keep it going.

Where a firm assesses income and expenditure as part of this, the assessment must be objective and informed by sufficiently detailed information, and the firm may have regard to the spending guidelines in the Standard Financial Statement or an equivalent tool⁹. The Standard Financial Statement is the budgeting framework used across the debt advice sector, so the figures a bank works from should be consistent with those a free debt advice charity would use. If a bank proposes support that clearly does not fit your budget, that is something to raise with it, and, if unresolved, with the ombudsman.

Can your bank suspend or remove your overdraft?

Yes, in the end it can, and the rules require the bank to warn you about that possibility. The firm must explain that if you fail to engage or take appropriate action, one possible consequence is that the firm may need to consider the suspension or removal of the overdraft facility or a reduction in the credit limit⁹. MoneyHelper puts the wider point bluntly: "One reason that an overdraft isn't safe for long-term borrowing is that it's not guaranteed. The bank could take it away" if it thinks you are over-using it and are in financial difficulty¹¹.

But the power is not unconditional. The rules state that the provisions allowing suspension, removal or credit limit reduction do not apply if that action would cause financial hardship to the customer¹. So a bank that has identified you as a repeat user in difficulty cannot simply pull the facility if doing so would push you into hardship; it must look at the other options first. The FCA's guidance to firms on borrowers in financial difficulty says the same¹².

There is case law of a kind, too, from the ombudsman. In a case involving a farming couple whose overdraft was called in, the ombudsman did not uphold the complaint: the bank had given reasonable notice and was entitled to call in the overdraft¹⁴. The lesson is that notice and fairness are what the ombudsman tests, not whether the bank was entitled to act at all. The narrower question of when a bank can reduce or remove an overdraft is covered in can my bank reduce or remove my overdraft?.

Breathing space and other protections that override the rules

The repeat use rules sit inside a wider landscape of debt protections, and some of them change what the bank must do. The clearest example is the Debt Respite Scheme, known as Breathing Space. Where a Debt Respite moratorium is in effect for a customer's overdraft and the firm is complying with its obligations under that moratorium, the firm is treated as providing appropriate forbearance and is not required to take the intervention steps in relation to that moratorium debt during the moratorium¹.

Breathing Space itself gives eligible over-indebted individuals statutory protection from interest, charges and enforcement action, for a proposed six weeks in the scheme as originally designed¹⁵, with a 60-day moratorium available once in each 12-month period¹⁶. The scheme's design is fixed rather than extendable: "Breathing space cannot be extended, as the fixed period provides certainty to creditors"¹⁶. If you enter Breathing Space, the pressure of overdraft charges and enforcement pauses while you take debt advice, and the repeat use intervention machinery stands down for that debt in the meantime.

Alongside Breathing Space, the alert rules give a real-time protection that works before repeat use ever develops. A firm must send an alert if it knows your personal current account is making use of arranged overdraft, or is reasonably able to determine that it will that day; the same applies where an account has entered unarranged overdraft, and where a charge has been incurred for attempting to enter unarranged overdraft¹⁷. Customers are enrolled for these alerts automatically, and while you can opt out of arranged overdraft alerts, staying enrolled means you know the same day you slip into the red¹⁷. Some banks also give you until midnight on the day you go overdrawn to pay the money back into your account¹⁸. The detail is in when your bank must alert you about overdrafts.

Complaints: the bank first, then the Financial Ombudsman

If you think your bank has failed to follow the repeat use rules, whether by never contacting you, by offering support that is not sustainable, or by removing your overdraft without regard to hardship, the route is the same as for any banking complaint. You complain to the bank first. It must look into things and get back to you within 15 days, either with a response or to explain why it cannot yet give one, and it then has to send you a final response within 35 days¹⁹. If you are not happy with that response, or the bank does not reply in time, you can bring the complaint to the Financial Ombudsman Service²⁰.

The ombudsman's deadline matters: you need to make the complaint within six months from the date on your final response⁵. The service also cannot help with complaints made more than three years after you know there is a problem²¹. For overdraft complaints specifically, the ombudsman's guidance on unaffordable lending says it may ask for current account statements for all accounts before the application to the present, and the dates any reviews were, or at least should have been, carried out²². Keeping your statements makes that easier.

The scale of the issue is visible in the complaint numbers. The ombudsman opened 5,863 overdraft complaints in 2025/26²³, alongside 55 business overdraft complaints in the first quarter of 2026/27²⁴. Across all products it processed 68,000 new complaints between April and June 2025²⁵, and its average time from having all the information needed to an initial assessment was 60.81 days in its 2024/25 reporting period²⁶. The FCA itself does not resolve individual complaints: it regulates the banks, and its Consumer Helpline on 0800 111 6768 can answer questions and provide information in large print, Braille or audio format, but compensation is the ombudsman's job²⁷. The wider landscape of protections is covered in consumer protection in UK financial services.