Competition and Markets Authority chastises HSBC over small business loan "bundling"

Emma Haslett
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The CMA accused HSBC of "bundling" small business loans with bank accounts (Source: Getty)

HSBC is one of two banks chastised by the government's new competition watchdog over the way it sells loans to small businesses.

The Competition and Markets Authority (CMA) said today it had previously warned banks over "bundling", the practice of forcing small and medium-sized firms taking out a loan with them to open business accounts, but that HSBC and First Trust Bank in Northern Ireland have "breached" that warning "by indicating to some [small businesses] that opening an account with them was a condition for obtaining a business loan".

The regulator said it has "issued detailed directions" to both banks "to ensure that these companies and their staff comply with the undertakings".

It added at two other banks there was "relatively low awareness" about the rules among the staff involved in handing out loans.

Alex Chisolm, the CMA's chief executive, said the regulator will "require a further audit next year" to confirm the banks have taken measures to ensure the practice is stopped.

Although all eight banks have recognised the importance of complying with the undertakings and are taking steps to address this, when breaches occur we need to ensure that there will be full compliance.

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