Nationwide has committed to refund £6m to affected current account customers after it broke a legal order from the Competition and Markets Authority (CMA).
The action comes after Nationwide was found to have broken Part Six of the CMA’s Retail Banking Market Investigation Order 2017, which ensures customers with personal current accounts receive a text alert before banks charge them for unarranged overdrafts. This gives customers time to take action to avoid unexpected charges.
Nationwide admitted contravening the Order 20 times, affecting over 320,000 customers. Some of the problems date as far back as February 2018 from when the Order was introduced.
The CMA has directed Nationwide to take immediate action and improve its practices and compliance with the Order. Any new processes must be audited by an independent body.
Adam Land, CMA Senior Director for Remedies, Business and Financial Analysis, said: “The text alerts we ordered banks to send to customers if they are about to slip into an unarranged overdraft are key to helping them avoid unexpected fees. Nationwide failed to do this on numerous occasions and our action today makes it clear they must fix this as a matter of urgency. It’s imperative that these problems are sorted out immediately and that they don’t occur again.
“Although we are pleased that Nationwide is going to reimburse customers affected, the CMA needs stronger powers for cases like this which is why we are seeking the ability to impose fines when firms breach our Orders.”
The CMA is also publishing a letter today to Nationwide about a breach of the Northern Ireland Personal Current Account Banking Market Investigation Order 2008.
Nationwide informed the CMA in June 2019 that, between June 2018 and June 2019, it had failed to provide leaflets on switching Personal Current Accounts to around 120,000 customers in breach of that Order. Although the Order was revoked before the CMA was notified of the breach, Nationwide has committed to provide affected customers with those leaflets.