Customers of HSBC and Santander are set to be refunded by both banks after the UK’s Competition and Market Authority (CMA).
Part 6 of the CMA’s Retail Banking Market Investigation Order, which requires financial institutions to automatically enrol their customers in an alert system that can warn them of changes to their accounts, like going overdrawn.
HSBC was found to have broken the rule twice and has agreed to pay a find of £8 million to 115,000 customers.
The UK-headquartered bank broke the rules because it had a policy of not disturbing customers after 22:45. When customers went overdrawn after that time they were not alerted.
“Having been the first bank to auto-enrol customers to unarranged overdraft SMS alerts, and seeing that six in 10 of our customers who receive one then pay in money, avoiding additional charges, we appreciate how helpful these text messages can be,” says an HSBC spokesperson.
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“We apologise to those customers who for different reasons did not receive an alert. We will continue contacting customers who incurred overdraft charges as a result of these issues to apologise and provide a refund.”
Santander was found to have broken the rule six times.
A spokesperson for the bank says: “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.”
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The refunds paid by the banks will cover all fees incurred by customers from going into unarranged overdrafts where they had not been warned beforehand by the required text alerts.
The CMA is also directing HSBC and Santander to undertake an independent check of their compliance with Part 6 between February 2018 and December 2019.