UK competition regulator finds that four banks have breached rules designed to protect consumers.
Under the Retail Banking Market Investigation Order 2017, banks and building societies operating in the UK are required to provide accurate information about their products and services in order to protect consumers. This includes details such as interest rates, and branch and cash machine locations with the Order also introducing the concept of ‘Open Banking’, which allows customers to share their financial data securely with authorised third parties.
According to a 25 July statement from the Competition and Markets Authority (CMA), HSBC, Lloyds, TSB and AIB have all fallen short of these standards, with HSBC the most egregious offender, with multiple instances of incorrect information being provided to customers.
FAILURE TO DISCLOSE
The CMA has detailed a series of failures by the banks, including HSBC’s inaccurate listing of 167 closed branches as open and the omission of two open branches, as well as incorrect annual rates for business loans and overdrafts. The bank also provided some customers with incorrect maximum unarranged overdraft charges for their personal current accounts. TSB failed to disclose maximum unarranged overdraft charges for personal current accounts, while AIB provided inaccurate annual rates for some loans and overdrafts through Open Banking and on its website. Lloyds, meanwhile, failed to make available addresses for 363 cash machines through Open Banking.
“People deserve banks they can trust to serve them well,” said CMA Senior Director Dan Turnbull in a statement. “Having correct information is essential when making important decisions about our finances. Banks handling our hard-earned money should have adequate processes in place to ensure this happens.”
The CMA closely monitors compliance with the Order and banks are required to report breaches within 14 days. While Lloyds, TSB, and AIB have acknowledged the breaches and are implementing measures to prevent recurrence, including enhancing internal procedures and staff training, the CMA believes HSBC’s failures warrant stricter action.
As a result, the Authority has issued HSBC with detailed directions outlining an action plan to ensure full compliance. This follows previous instances of non-compliance by the bank.
HSBC “SORRY”
Turnbull added: “It’s disappointing that seven years on, we have to put in place formal enforcement measures to secure better compliance from a major bank like HSBC which, yet again, is in breach of the rules. The CMA will continue to closely monitor all banks’ compliance to ensure customers can clearly and confidently manage their finances.”
Commenting on the CMA’s action, an HSBC UK spokesperson said in a statement: “We are sorry for errors on our part which caused these breaches. When we discovered them we reported these to the regulator. We have taken steps to avoid a repeat of these issues in the future.”
Since the 2017 Order came into effect, customers have been refunded a total in excess of GBP 47 million while, over the same period, the CMA has issued five sets of legally binding directions and written public letters to banks 35 times to remind them of their obligations under the terms of the Order.
