NatWest, Danske Bank and Nationwide all fall short of CMA retail banking order

The Competition and Markets Authority (CMA) problems NatWest Group, Danske Bank and National construction company letters of concern over multiple breaches of its 2017 Retail Banking Market Investigation Order.

The UK competition regulator has issued letters of concern over various breaches of its 2017 Retail Banking Market Inquiry Order, all of which occurred between 2017 and 2022.

The Order is CMA’s effort to increase competition and customer engagement in the retail banking industry and encourage the development of new services.

Among its various initiatives, the regulation aims to make it easier for businesses and individuals to compare different providers, including prices and quality of service.

The order includes measures to streamline the current account switching process and improve current switching services.

This is in addition to measures targeting SME banking services. The ordinance obliges banks to offer a quote and an eligibility indicator tool, offering SMEs the same comparison capabilities as retail customers.

Banks are required to agree and adopt a set of basic standards regarding business current accounts and how SMEs can open them; lock in retail banking monopolies among incumbent banks.

Violations of the Retail Banking Ordinance

The Bank breached Part Eight of the Order when it failed to display the correct Annual Percentage Rate (APR) in an SME lending product between 2017 and 2022.

As stated in Part Eight of Section 32 of the Ordinance, any information regarding SME loan APRs must be “available to third parties (such as price comparison websites)” and “accurate, complete and up to date”.

In a letter to NatWest today, the CMA clarified that Bank of Ulsterthe group bank offering its SME lending product, had not posted any APR information for part of the five-year period,

In addition to this violation, the bank had also incorrectly displayed the interest rate, a component of the APR, instead of the full APR.

“NatWest’s inability to provide the correct APR to price comparison websites and other third parties for its Ulster Bank variable rate loan may have led SMEs to choose a more expensive loan than they would have done otherwise,” the CMA letter read.

NatWest acknowledged that while most of the 1,018 SMEs that took out a loan from Ulster Bank during this period were existing customers interacting directly with the bank, SMEs new to the banks were likely to having retrieved loan information from a third party. .

The bank identified 97 instances where SMEs could have been presented with the wrong APR because they used a third-party site that was provided with inaccurate information.

It notified the CMA of this breach on July 29, 2022.

The regulator concluded that the Danish banking company breached the second part of the order when it failed on 45 occasions to ensure the accuracy of information about its business checking account products.

The second part of the order requires the UK’s largest banks to submit “accurate, complete and up-to-date information on products and services” and that this information be made available at all times through open banking APIs.

The bank failed in this regard when it presented incorrect fees and charges to customers on 42 occasions.

This failure lasted between four years between January 2018 and July 26, 2022.

He breached the order on three other occasions when information about the benefits and features of his business checking accounts was misrepresented, between October 2018 and July 26, 2022.

The AMC’s letter to Danske Bank read: “Failure to continuously make accurate, complete and up-to-date product and service information available through the Open Banking APIs may lead consumers to take decisions they would not have made had they had access to the correct information.”

He continued: “For example, a business expecting to be charged on a ‘per transaction’ basis for submitting direct debit files to BACS may have been surprised to find that it had been charged on a monthly basis. “

Danske notified the CMA of the violations on July 13, 2022.

The UK was also found guilty of breaching the second part of the order when it committed a similar offense by failing to publish accurate information 10 times.

The 10 cases occurred between March 10, 2017 and October 7, 2022.

In a breach, recorded between June 3, 2020 and February 26, 2021, the bank’s transaction fee rate for non-pound sterling cash withdrawals and foreign currency debit card payments were misquotes at 2.75% instead of the correct 2.99%.

This breach is related to the bank’s FlexAccount, FlexDirect and FlexBasic personal checking account products.

On another occasion, between February 1, 2022 and May 17, 2022, the bank’s FexOne product deposit interest rate was incorrectly quoted as 0.1% when it was actually 0.25%.

Another breach between January 29, 2020 and February 26, 2021 showed the non-UK ATM charges for all the products mentioned above at £1 instead of zero.

As this was a similar offence, the CMA also quoted the same response it gave to Danske Bank, saying that inaccurate data can lead “consumers to make decisions they would not have not taken if they had had access to the correct information”.

The CMA was notified of the breaches by the bank on May 27, 2022 and October 14, 2022.

Next steps

In its three letters, the regulator said it “did not consider it appropriate to take further formal enforcement action regarding these breaches at this time”, but added that future compliance by NatWest, Danske Bank and Nationwide will be closely monitored. close.

NatWest is to provide financial redress for the 97 instances where SMEs received incorrect information and will be in contact with the 929 existing customers affected to explain the breach.

It is also reviewing and re-engineering its lending processes with third-party vendors while engaging sales teams in relevant training sessions.

Danske Bank also reacted proactively. It creates and implements a data management tool, modifies its product governance framework and develops its management procedures.

It also subjects all of its business checking account product data uploaded to its open banking APIs to four-eye scrutiny; among other guarantees.

Likewise, Nationwide is currently reviewing its product change management checklist processes among many of its other reforms.

These include the development of a visualization utility for Personal Current Account Product Information APIs and the introduction of monthly product information reviews with the Open Data API to ensure accuracy and their alignment.

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