More than £47m unarranged overdraft fees refunded to banking customers

In the last two years, the Competition and Markets Authority (CMA) has secured more than £47 million in refunds for customers whose banks failed to properly warn them about unarranged overdraft charges.

More than £47m unarranged overdraft fees refunded to banking customers

The CMA has taken action against five of the UK’s biggest banks and building societies for breaching Part 6 of the Retail Banking Market Investigation Order 2017.

This required that customers with personal current accounts must receive a text alert warning of fees before banks charge them for an unarranged overdraft. Receiving this alert is designed to give people time to take action and avoid any unexpected charges.

The total of just over £47m comprises refunds secured since the CMA started enforcing the Order in 2018, including new refund amounts from Royal Bank of Scotland and Santander.

RBS failed to send accurate text warnings to 36,000 customers, from February 2018 until December 2019, and has now agreed to fully repay the charges – as well as providing an additional 8% in interest – bringing the total it will refund to customers to £2.2m. The CMA’s letter to RBS was published today.

Santander has put aside £17m to refund customers for 6 breaches of the order. This will impact up to 470,000 customers who will all be refunded in full. This is on top of £2m in refunds by Santander already announced by the CMA in May 2019.

Since 2018, the CMA’s action has also led to refunds for customers from 3 other banks and building societies of around:

  • £11m for current account holders at Metro Bank
  • £8m for current account holders at HSBC
  • £7m for current account holders at Nationwide

The CMA dealt with some of the worst breaches by issuing legally binding directions, which ensured that banks were committed to refunding those affected. In some cases, the banks and building societies also voluntarily offered to pay interest on the charges.

Andrea Coscelli, chief executive of the CMA, said: “Text alerts have been absolutely key in helping people to avoid unfair unarranged overdraft charges and, where banks have failed to comply, the CMA has worked to secure millions in refunds for customers.

“While these breaches are disappointing - and may have been preventable had the CMA been able to issue serious financial penalties - our action has put a total of more than £47m back into people’s pockets. With responsibility for enforcing this now sitting with the FCA, the dedicated sector regulator, we’re confident that this will continue.”

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