By Sammie Jones
The Competition Market Authority (CMA) has secured £900,000 in refunds for Nationwide customers after failing to correctly warn them that they would be charged for entering an unarranged overdraft.
The move comes after the building society was found to have broken Part 6 of the Competition and Markets Authority’s (CMA) Retail Banking Market Investigation Order, which states that customers with personal current accounts must receive a text alert warning of fees before banks charge them for an unarranged overdraft. This gives people time to take action and avoid unexpected fees.
Text alerts sent by nationwide did not contain a warning that customers would be charged. This affected approximately 70,000 customers, known to the building society as having difficulty managing their accounts and so at a higher risk of entering unarranged overdrafts. It is the second time in 6 months that the CMA has taken action against Nationwide for breaking this Order, having secured £6 million in refunds for affected customers in August 2019.
The CMA has already issued directions to Nationwide, HSBC and Santander, and written publicly to Santander about breaches of Part 6 of the Order, securing a total of £17m in refunds for customers affected
Adam Land, Senior Director of Remedies, Business and Financial Analysis, said:
Banks and building societies that fail to send customers text alerts saying they will be charged if they enter an unarranged overdraft are breaking the rules. The fact that Nationwide is a repeat offender makes it even more serious.
Following our action, it will now repay all affected customers, and quickly.
This is exactly the sort of issue we would expect to fine companies for in future, if the Government gives us the increased powers we’ve asked for. Nationwide now has in place an independent auditor to review its processes, as directed by the CMA, and has begun refunding its customers.
The refunds paid by the building society cover all fees incurred by customers from going into unarranged overdraft