Nationwide is to repay customers after it failed to correctly warn them that they would be charged for entering an unarranged overdraft.
The move comes after the building society was found to have broken Part Six of the Competition and Markets Authority’s (CMA) Retail Banking Market Investigation Order, which states that customers with personal current accounts must receive a text alert warning of fees before banks charge them for an unarranged overdraft. This gives people time to take action and avoid unexpected fees.
Although Nationwide did send text alerts, these did not contain a warning that customers would be charged. This affected approximately 70,000 customers, known to the building society as having difficulty managing their accounts and so at a higher risk of entering unarranged overdrafts.
It is the second time in six months that the CMA has taken action against Nationwide for breaking this Order, having secured £6m in refunds for affected customers in August 2019.
Adam Land, Senior Director of Remedies, Business and Financial Analysis, 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 now has in place an independent auditor to review its processes, as directed by the CMA, and has begun refunding its customers.
The refunds paid by the building society cover all fees incurred by customers from going into unarranged overdraft.