I’ve just read FD’s unarranged overdraft advice on their website:
An unarranged overdraft is when you authorise a payment that would take your account overdrawn or beyond your arranged limit without agreeing in advance an overdraft to cover it. We’ll always consider an unarranged request and will make the payment if we can, subject to status. An unarranged overdraft may result in declined transactions. If you are in your unarranged overdraft for greater than 30 days this could have an impact on your credit file.
Ordinarily, I wouldn’t expect a bank to fulfil a SO if it would involve taking the account overdrawn (beyond any arranged overdraft), since I thought the norm was for banks to try and stop any payments that the account balance or arranged overdraft couldn’t cover (in other words, it’s really only offline card transactions that could sneak through). However, the wording on their website suggests that they will fulfil the payment request if they can (status permitting), which I find interesting - perhaps it’s something to do with FD’s ‘personal touch’ style of service, and the fact that they tend to be more selective in which customers they take on in the first place.
As to why you weren’t charged for briefly slipping into an unarranged overdraft:
We won’t charge Overdraft interest if covering funds are paid in before the end of the day (defined as 11:45pm).
I think a fair few banks do something similar in terms of giving until the end of the day as a grace period. With FD, they then charge 39.9% EAR from the following day, with a £20 monthly cap. They also state it must be repaid within 30 days.