Nationwide Building Society are to refund £6m to current account customers after the Competitions Market Authority (CMA) found they broke rules relating to text alerts designed to help people avoid overdraft charges.
The order is to ensure customers who have personal current accounts to receive the text alert prior to being charged for unarranged overdrafts.
The building society admitted breaking the order that affected more than 320,000 customers.
Adam Land, CMA senior director for remedies, business and financial analysis said, “The text alerts we ordered banks to send to customers if they are about to slip into an unarranged overdraft are key to helping them avoid unexpected fees.
“Nationwide failed to do this on numerous occasions and our action today makes it clear they must fix this as a matter of urgency.
“It’s imperative that these problems are sorted out immediately and that they don’t occur again.
“Although we are pleased that Nationwide is going to reimburse customers affected, the CMA needs stronger powers for cases like this which is why we are seeking the ability to impose fines when firms breach our orders.”
A Nationwide spokeswoman said, “The CMA retail banking market investigation order 2017 requires firms to send consumers text alerts where they are at risk of incurring unarranged overdraft, paid and unpaid transaction fees, giving them an opportunity to avoid the charges.
“Nationwide has sent over 19m alerts since the rules were introduced. “We have engaged proactively with the CMA to review these incidents, which were first reported to them in 2018 and the wording was corrected in November 2018.
“We have implemented improvements and additional controls to ensure this does not happen again. These controls are currently being reviewed by independent third parties.
“As an organisation that prides itself on service, we apologise for these incidents and any inconvenience caused.
“We have started the process for refunding members and will ensure no one is left out of pocket.”