The Competitions and Markets Authority has ordered Nationwide to refund customers following a breach of overdraft rules.
Nationwide is to repay customers £900,000 after breaching overdraft rules set out by the Competition and Markets Authority (CMA).
Customers with a personal current account must receive a text alert warning of fees before banks charge them in an unarranged overdraft, under Part 6 of the CMA’s Retail Banking Code.
The rules aim to give people time to take action and avoid paying unexpected overdraft fees.
Although Nationwide did send text alerts, they did not contain a warning that customers would be charged for using an unarranged overdraft.
Around 70,000 customers were affected by the breach.
What happens next?
Nationwide has put an independent auditor in place to review its processes, as directed by the CMA, and has begun refunding its customers.
The refunds paid by the building society cover all fees incurred by customers from going into unarranged overdraft.
It is the second time in six months the CMA has taken action against Nationwide for breaking this order.
In August 2019 Nationwide had to pay a £6 million refund to hundreds of thousands of customers.
Adam Land, senior director of remedies, business and financial analysis at the CMA says: “Banks and building societies that fail to send customers text alerts saying they will be charged if they enter an unarranged overdraft are breaking the rules.
“The fact that Nationwide is a repeat offender makes it even more serious.
“Following our action, it will now repay all affected customers, and quickly.
“This is exactly the sort of issue we would expect to fine companies for in future, if the Government gives us the increased powers we’ve asked for.”
Nationwide say that they are in the process of contacting affected customers and will issue refunds automatically.
Sara Bennison, chief marketing officer at Nationwide Building Society, says: “The CMA Directions, issued to Nationwide in August 2019, required the Society to complete an independent review of its processes in relation to text alerts.
"While all members received their texts on each and every occasion, this review identified that alerts sent to members who were in Collections did not explicitly state that they would be charged an unarranged overdraft fee.
“While these members haven’t been overcharged, we appreciate these texts are designed to help people avoid unarranged overdraft charges, so we apologise that on this occasion we didn’t meet the high standards we set ourselves.
"We are contacting impacted members and will be automatically refunding the charges back into their account.
“From 11 November 2019, the Society removed unarranged overdraft charges, so this issue will not occur again in the future.”
They are suppose to be for the customer, instead they are making huge profits and putting into the pocket of the Chief Executive, giving him a pay rise each year for what, and a generous pension, where as us savers are getting a pittance in interest, makes me sick......