Barclays has been asked to improve its practices towards small and medium enterprises (SMEs) by the UK Competition and Markets Authority (CMA) after it was found to have broken rules framed to protect them.
According to the competition watchdog, Barclays informed it of non-compliance with aspects of legal commitments designed for enabling businesses to easily shop around and select the suitable accounts for them.
Barclays and other banks signed the legal undertakings in 2002. Under these is a ban on banks which insist that businesses should open or maintain current accounts prior to accessing other products.
The CMA said that the London-based investment bank violated the undertakings by preventing SMEs with business premium accounts from transferring money to or from non-Barclays accounts. Another breach as per the watchdog was informing holders of notice deposit accounts that they had to open a current account at Barclays.
The CMA said that the actions of the bank resulted in unnecessary costs to certain SMEs who were made to hold accounts they did not require. The bank has been ordered to pay total compensation of around £2,000 to impacted business premium account holders to reimburse them for payments they were not supposed to have made.
The competition watchdog has issued directions to Barclays, under which the bank has to stop bundling products together as done previously, and to make sure that measures are in place to prevent it from repeating.
The CMA said that Barclays took steps to fix the problem following the reporting of the issue to it. The bank allowed impacted customers to transfer funds to and from other banks, and modified their terms and conditions such that those who want to open notice deposit accounts are no longer told they need a current account with the bank.
CMA senior director Adam Land said: “The Undertakings are clear that banks must not force small businesses to have current accounts with them, as part of a practice known as bundling. Bundling prevents small firms from being able to choose the best banking products for them and can result in unnecessary costs.
“The Directions issued today make clear Barclays must take immediate action to correct the problems they found and ensure they do not occur again.”