NatWest must dish out £600,000 in refunds because it breached rules by forcing business customers to open “costly” current accounts to access loans, a watchdog has ruled.
In a statement today, the Competition and Markets Authority (CMA) said it found that NatWest breached its retail banking rules by making business customers to open fee-incurring accounts in order to secure loans in a practice known as ‘bundling’.
The breach lasted for over three years, the CMA said, with NatWest failing to alert the CMA until January 2021 by which time over 700 customers had fallen foul of the scheme.
The CMA’s senior director of remedies Adam Land said that bundling the products was an “unacceptable” and “direct breach” of rules that had been in place for more than 20 years.
“NatWest should have known better,” Land said in a statement. “These rules are there for a reason: to make sure small businesses are treated fairly, and to make sure the market is competitive.”
The CMA said it has now issued legal directions to NatWest and the bank is in the process of refunding the affected customers.
NatWest is now planning to write to all affected SME customers with a business account to offer them the option of switching to a fee-free loan servicing account.
The CMA has been looking to crackdown on breaches of its retail banking rules and has issued a series of bundling rebukes to lenders including HSBC, Danske Bank, Clydesdale Bank, and Lloyds, in the past four years.
NatWest received another slap on the wrist from the CMA in July over failures to make “accurate, comprehensive and up to date product and service information” available via open banking, which it said may result in consumers making wrong decisions.
A Natwest spokesperson said a “technical issue” meant that a small number of new business customers were “incorrectly provided with a business current account when taking out a business loan”.
“On discovery of this issue, we promptly informed the CMA of the error and resolved it. We have written to the small number of business customers that were affected and refunded them in full,” the spokesperson said.