By Ashley Young-
Metro Bank has been forced to refund £10.5m in fees after failing to inform close to 130,000 cusomers that they would be charged for entering an overdraft. Although text alerts were sent, the test alerts failed to inform customers that they would be charged.
This breach has been continuing since February 2018, when the Order was introduced. Additionally, some of these alerts were sent later than they should have been.
Metro bank was found to have breached Part 6 of the Competition and Market Authority’s (CMA) Retail Banking Market Investigation Order 2017. This requires banks to ensure that customers with personal current accounts receive a text alert warning about charges before banks charge them for unarranged overdrafts, so they have time to act and can avoid unexpected fees.
The CMA’s investigation found that Metro Bank failed to inform nearly 130,000 customers that they would be charged for entering an unarranged overdraft. Although text alerts were sent, these did not inform customers that they would be charged. This breach has been continuing since February 2018, when the Order was introduced. Additionally, some of these alerts were sent later than they should have been.
As well as refunding £10.5 million in fees, Metro Bank has offered to pay back 8% interest on the charges bringing the expected total remuneration to around £11.4 million. It will also consider reasonable claims for extra costs incurred by affected customers. In February, the bank revealed that it would face £27 million in remediation costs, which includes the overdraft payments.
Several major banks have been ordered to repay customers after the new CMA rules came into force just over two years ago. HSBC, Santander and Nationwide have all recently been stung by the competition watchdog, after refunds of £8m were granted to al 115,000 of their customers for failing to alert customers who went into the red. The Competition and Market Authority said they broke rules by not sending text messages allowing people to avoid unarranged overdraft charges. Adam Land, CMA Senior Director for Remedies, Business and Financial Analysis, said:
”The text alerts we ordered banks to send to customers have been crucial in helping people avoid unexpected fees from entering an unarranged overdraft.