Refunds For All: HSBC and Santander ordered to pay £8 million back to their customers
December 19, 2019
1 min read
What's going on here?
The Competition and Markets Authority (CMA) has ordered Santander and HSBC to refund over £8 million to its customers for breaking a legal order since February 2018.
What does this mean?
The legal order concerned is Part 6 of the CMA’s Retail Banking Investigation Order (the Order) which came into force in February 2018. The Order ensures that customers are notified by their banks through text messages before being charged for unarranged overdrafts. This would allow customers the opportunity to transfer money into their account and avoid charges.
HSBC was found to have broken the Order twice and has agreed to refund £8 million to 115,000 customers. Santander was also found to have broken the Order six times and has agreed to refund its customers, however, the bank has not confirmed the amount of money or number of customers affected. The CMA has stated that the refunds will cover all fees incurred by customers.
What's the big picture effect?
The CMA has also directed both banks to “undertake an independent check of their compliance” with Part 6 of the Order between February 2018 and December 2019.
The regulator’s firm approach towards the breaches indicates the importance of transparency around overdraft fees. Just in August, the CMA also ordered NatWest to refund £6 million to 320,000 customers affected.
This is further emphasised by the Financial Conduct Authority’s (FCA) order to scrap all unarranged overdraft fees by April 2020 and to charge a single interest rate for arranged overdrafts instead.
Report written by Heerim Hwang
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