Yahoo Finance NatWest told to pay £600,000 in refunds to business customers
NatWest (NWG.L) is to refund hundreds of business customers after it “forced” companies to open a fee-paying business account in order to secure a loan, the watchdog has ordered.
The Competition and Markets Authority (CMA) said the practice, known as 'bundling', breached its rules over a three-year period. The bank will now issue a total of £600,000 in refunds.
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Companies were pushed into opening a business current account, which incurs fees, in order to secure a loan. As such, “hundreds of businesses” have been charged monthly for a business account that they may not have wanted or needed, the CMA said.
The CMA said the bank "should have known better" as a total of 956 NatWest customers were affected, with 702 set to receive refunds.
NatWest is now set to write to all affected SME customers with a business account to offer them the option of switching to a fee-free loan servicing account.
Adam Land, CMA senior director of Remedies, 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."
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The watchdog added that having scrutinised the error more closely, it 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 move comes as part of the CMA’s crackdown on breaches of its banking rules. Over the past four years, it 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: £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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