Nationwide Building Society breaches Part 6 of the CMA’s Retail Banking Market Investigation Order
Nationwide to repay nearly £1m to its customers. (Credit: © Crown copyright)
Nationwide Building Society has been ordered by the Competition and Markets Authority (CMA) to repay £900,000 to overdraft customers after it failed to correctly warn that they would be charged for entering an unarranged overdraft.
About 70,000 customers with personal current accounts will receive around £900,000 in total after Nationwide breached Part 6 of the CMA’s Retail Banking Market Investigation Order.
As per the ruling, which came into effect in 2018, banks must send text alert warning of fees to the customers with personal current accounts prior to charging them for an unarranged overdraft.
CMA said that the rule intends to give time for people to take necessary action and avoid unexpected fees.
The UK competition watchdog noted that the affected customers were ‘known to the building society as having difficulty managing their accounts and so at a higher risk of entering unarranged overdrafts’.
CMA’s second action against Nationwide in last six months for breaching overdraft rules
The latest move represents the CMA’s second action against Nationwide in the last six months for breaking the order. Nationwide was ordered to pay £6m in refunds for affected customers in August 2019.
CMA remedies, business and financial analysis senior director Adam Land said: “Banks and building societies that fail to send customers text alerts saying they will be charged if they enter an unarranged overdraft are breaking the rules. The fact that Nationwide is a repeat offender makes it even more serious.
“Following our action, it will now repay all affected customers, and quickly. This is exactly the sort of issue we would expect to fine companies for in future, if the Government gives us the increased powers we’ve asked for.”
Nationwide, which started refunding its customers, placed an independent auditor to review its processes. The refunds cover all fees incurred by customers from going into unarranged overdraft.