The UK’s Competition and Markets Authority (CMA) said on Thursday it has taken action against five of the UK’s biggest banks and building societies “for breaching Part 6 of the Retail Banking Market Investigation Order 2017.”
The CMA said: “This required that customers with personal current accounts must receive a text alert warning of fees before banks charge them for an unarranged overdraft.
“Receiving this alert is designed to give people time to take action and avoid any unexpected charges.”
The total of just over £47 million comprises refunds secured since the CMA started enforcing the order in 2018, including new refund amounts from Royal Bank of Scotland (RBS) and Santander.
“RBS failed to send accurate text warnings to 36,000 customers, from February 2018 until December 2019, and has now agreed to fully repay the charges – as well as providing an additional 8% in interest – bringing the total it will refund to customers to £2.2 million.”
The CMA’s letter to RBS was published on Thursday.
The CMA added: “Santander has put aside £17 million to refund customers for 6 breaches of the Order, announced by the CMA last year.
“This will impact up to 470,000 customers who will all be refunded in full.
“This is on top of £2m in refunds by Santander already announced by the CMA in May 2019.”
The CMA said that since 2018, its action has also led to refunds for customers from three other banks and building societies of around:
- £11 million for current account holders at Metro Bank
- £8 million for current account holders at HSBC
- £7 million for current account holders at Nationwide
CMA chief executive Andrea Coscelli said: “Text alerts have been absolutely key in helping people to avoid unfair unarranged overdraft charges and, where banks have failed to comply, the CMA has worked to secure millions in refunds for customers.
“While these breaches are disappointing — and may have been preventable had the CMA been able to issue serious financial penalties — our action has put a total of more than £47 million back into people’s pockets.
“With responsibility for enforcing this now sitting with the FCA, the dedicated sector regulator, we’re confident that this will continue.”