Latest from the Competition and Markets Authority;
Following CMA action, NatWest is set to refund hundreds of business customers after it wrongfully forced them to open current accounts to secure a loan, which cost money.
The Competition and Markets Authority (CMA) has found that NatWest breached CMA banking rules by forcing business customers to open a business current account, which incurs fees, in order to secure a loan – a practice known as ‘bundling’.
Many building societies used to do a similar thing back in the day, demanding that mortgage applicants open savings accounts, or transfer large cash sums, in order to `facilitate’ the loan.
As such, hundreds of businesses have been charged monthly for a business account that they may not have wanted or needed. It also limited businesses’ choice as they were unable to hold an account with a separate provider, which may have better met their requirements. The breach lasted for over 3 years, with NatWest failing to alert the CMA until January 2021. Having scrutinised the error more closely, the CMA became aware the bank had signed certain customers up to a business account, when they had specifically requested to have a fee-free account.
The CMA has now issued legal directions to NatWest, and the bank is in the process of refunding affected customers. NatWest will now write to all affected SME customers with a business account to offer them the option of switching to a fee-free loan servicing account.
The move comes as part of the CMA’s crackdown on breaches of its banking rules. Over the past 4 years, it has put a stop to bundling by HSBC, Danske Bank, Clydesdale Bank, and Lloyds, as well as securing millions in refunds in relation to overdraft charges: £17 million for Santander customers, £11 million for Metro Bank customers, £8 million for HSBC customers, and £7 million for Nationwide customers.
For more information, see the directions issued to NatWest by the CMA.
WHEN WILL THE CRACKDOWN ON “MIDDLE CLASS ONLY” NEW ACCOUNT SWEETENERS HAPPEN?
If you open a new current account with a UK High Street bank you might get a cash bonus. Expcept there are T&Cs which include income thresholds, so basically many of these offers are NOT available to those on benefits, retired, or working part-time. This is blatant class discrimination and definitely not woke and inclusive, as the banks like to portray themselves.
The CMA needs to force the banks to scrap these offers, or make them available to ALL who switch bank accounts. Get on with it.