NatWest will reimburse around 700 small businesses for a total of £600,000 after wrongly forcing them to open checking accounts to secure a loan, following a ruling by the Competition and Markets Authority.
The big bank broke banking rules on ‘bundling’ by forcing business customers to open a business current account, which incurs a fee, in order to get a loan, the regulator said.
The AMC says: “Hundreds of businesses have been charged monthly for a business account they may not have wanted or needed.
“It also limited choice for companies as they were unable to hold an account with a separate provider, which might have better suited their requirements.”
He adds that the breach lasted more than three years, with NatWest not alerting the watchdog until January last year. He found that the bank had signed up some customers on a business account, when they had specifically requested a no-fee account.
The AMC says it has “issued legal instructions” to NatWest, which is in the process of refunding affected customers.
NatWest will now write to all affected small business customers with a business account to offer them the option of upgrading to a loan servicing account at no cost.
CMA Senior Director of Remedies Adam Land says: “Forcing businesses to open expensive checking accounts to secure essential loans is unacceptable – and a direct breach of our rules, which have been in place for 20 years.
“NatWest should have known better. These rules are there for a reason – to make sure small businesses are treated fairly and to make sure the marketplace is competitive.