Good morning!

Paul has added new sections to yesterday’s report, so that’s worth checking out first thing.

Mourinho has been sacked - quite upsetting for me, as I bought some José-related memorabilia during my recent trip to Old Trafford, which I planned to give as Christmas presents.

On the other hand, maybe we can see some attractive football from the old club again, at some point in future.

Today I am looking at:

Financial Conduct Authority

FCA Proposals on Overdrafts and other High-Cost Credit Products

This FCA work has been rumbling away in the background for a while.

Indeed, I reckon that the regulatory mood in relation to credit products has been affecting the valuation at H & T (LON:HAT) (in which I have a long position). This share currently trades at less than 8x forward earnings according to Stockopedia. But it won't be affected by today's proposals.

Where the proposals will have a massive impact is on overdrafts.

Several years ago, I was a very regular user of my overdraft - and deliberately so. The rate being charged wasn't particularly high, so it was worth it.

That all changed when the bank introduced flat daily fees - fixed fees up to £1,000, £2,000 and £3,000.

This was trumpeted as an improvement, as it made the overdraft fee easier to calculate, according to my bank (I didn't agree, because it meant that a complicated calculation was needed to figure out the implied APR).

Perhaps due to pressure from the powers that be, the bank also cut some of the heavy charges that applied to customers who went over their borrowing limits and who requested payments which could not be made.

The abolition of those charges meant that higher charges needed to be made to customers for their ordinary use of overdrafts.

Put it all together and the implied interest rate on my facility had become exorbitant. It was no longer economic for me to use it, and I have only rarely done so since.


There are several proposals announced today. This is one of…

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