Following action by the Competition and Markets Authority (CMA), NatWest is set to refund hundreds of business customers after it wrongfully forced them to open current accounts to secure a loan. The current accounts generated costs for the applicants.

The CMA has found that NatWest breached CMA banking rules by forcing business customers to open a business current account, which incurs fees, in order to secure a loan – a practice known as ‘bundling’.

As such, hundreds of businesses have been charged monthly for a business account that they may not have wanted or needed. It also limited businesses’ choice as they were unable to hold an account with a separate provider, which may have better met their requirements.

The breach lasted for over 3 years, with NatWest failing to alert the CMA until January 2021. Having scrutinised the error more closely, the CMA 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 CMA has now issued legal directions to NatWest, and the bank is in the process of refunding affected customers. NatWest will now write to all affected SME customers with a business account to offer them the option of switching to a fee-free loan servicing account.

Source: New feed