Competition watchdog secures £47m in overdraft refunds from major banks
The Competition and Markets Authority (CMA) has secured £47m in refunds for consumers from banks which failed to properly warn them about overdraft charges in the last two years.
Customers with personal current accounts must receive a text alert warning of fees before banks charge them for an unarranged overdraft.
Today, the CMA announced that RBS and Santander are the latest banks refunding money over breaches of the rules.
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 eight per cent in interest – bringing the total it will refund to customers to £2.2m, the CMA said.
An RBS spokesperson said: “We apologise to any customers affected, we are contacting those customers to let them know to expect a refund of these charges and we have put systems in place to ensure that this does not happen again.”
Santander has put aside £17m to refund customers for six breaches, announced by the CMA last year. This will impact up to c.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.
A Santander spokesperson said: “We are very sorry that some of our customers were not sent required overdraft alerts. The introduction of these alerts was a move we welcomed and believe is of real support to our customers.”
“We have now carried out a detailed review to understand why the errors happened and have taken steps to fix the issues. Meanwhile, we continue to work closely with the CMA on a full analysis of customer data and have made significant progress in identifying affected customers.”
Since 2018, Metro Bank as had to refund £11m to current account customers, HSBC has refunded £8m to customers and building society Nationwide has refunded £7m to account holders.
The CMA said it dealt with some of the worst breaches by issuing legally binding directions, which ensured that banks were committed to refunding those affected. In some cases, the banks and building societies also voluntarily offered to pay interest on the charges.
Andrea Coscelli, chief executive of the CMA, 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 £47m 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.”