HSBC and Santander UK will compensate more than 115,000 customers after they failed to keep up with new regulations designed to help them avoid falling into their overdrafts.
Since February 2018, banks have been required to text customers when their accounts are close to running out of money, to give them time to avoid being charged high fees for using an unarranged overdraft.
However, HSBC and Santander both failed to send texts when they should have done on several occasions shortly after the rules were introduced, according to the Competition and Markets Authority. HSBC will refund £8m to 115,000 customers who were charged without receiving warning texts.
The CMA said Santander had broken the order six times and had agreed to issue a refund but had yet to work out exactly how many customers were affected or how much it would cost.
“We are very sorry that some customers in certain circumstances were not sent the required overdraft alerts. The introduction of these alerts is a move we welcomed and believe is a real support to customers,” a Santander spokesperson said on Friday.
“We have carried out a detailed review to understand why the errors happened and have taken steps to fix the issues. We are now working to identify and refund all affected customers as quickly as possible,” the person added.
The watchdog has also asked the two banks to check whether they have committed any other breaches of the rule since February 2018.
The announcement on Friday follows a similar ruling on building society Nationwide this year, which was forced to refund 300,000 customers.
The text warning rules were introduced after an 18-month CMA probe of the retail banking market that was widely criticised for not making more radical proposals to shake up the sector, which remains dominated by a small number of banks despite efforts to encourage challengers since the financial crisis.
Next year stricter rules will come into force banning banks from charging higher fees for unarranged overdrafts, and forcing them to provide more transparent pricing information.
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