NatWest breaches CMA banking rules on ‘bundling’

NatWest has been found to have breached banking rules by forcing business customers to open a business current account, which incurs fees, in order to secure a loan.

A practice known as “bundling”, the Competition and Markets Authority (CMA) found that the breach lasted for over three years, with NatWest failing to alert the CMA until January 2021.

As such, hundreds of businesses have been charged monthly for a business account that they may not have wanted or needed. The practice also limited businesses’ choice as they were unable to hold an account with a separate provider, which may have better met their requirements.

Having scrutinised the error more closely, the CMA became aware the bank had signed certain customers up to a business account, when they had specifically requested to have a fee-free account.

The CMA has now issued legal directions to NatWest, and the bank is in the process of refunding affected customers. Over 700 small and medium-sized firms are estimated to receive refunds, and NatWest will now write to all affected SME customers with a business account to offer them the option of switching to a fee-free loan servicing account.

Senior director of remedies at the CMA, Adam Land, said: “Forcing businesses to open costly current accounts to secure essential loans is unacceptable – and a direct breach of our rules, which have been in place for 20 years. NatWest should have known better. These rules are there for a reason: to make sure small businesses are treated fairly, and to make sure the market is competitive.”

The latest move comes as part of the CMA’s crackdown on breaches of its banking rules. Over the past four years, the regulator has put a stop to bundling by HSBC, Danske Bank, Clydesdale Bank, and Lloyds, as well as securing millions in refunds in relation to overdraft charges – including £17m for Santander customers, £11m for Metro Bank customers, £8m for HSBC customers, and £7m for Nationwide customers.

A NatWest spokesperson said: “A technical issue meant that a small number of new business customers were incorrectly provided with a business current account when taking out a business loan. On discovery of this issue, we promptly informed the CMA of the error and resolved it. We have written to the small number of business customers that were affected and refunded them in full.”

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