Nationwide to refund customers £900,000 for overdraft text failures
Nationwide will repay £900,000 to customers after it failed to correctly warn them that they would be charged for entering an unarranged overdraft.
The move follows an investigation by the Competition and Markets Authority (CMA), which ruled that the building society fell foul of rules stating customers with personal current accounts must receive a text alert warning.
Although Nationwide did send text alerts, these did not contain a warning that customers would be charged, the watchdog said.
The issue affected roughly 70,000 customers who were known the the building society as having difficulty managing their accounts and so were at a higher risk of entering unarranged overdrafts.
It is the second time in six months that the CMA has taken action against Nationwide for breaking these rules.
In August the company was made to refund £6m after it contravened the rules 20 times, affecting more than 320,000 customers.
Adam Land, CMA senior director of remedies, business and financial analysis, said: “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,” he added.
Nationwide has now hired an independent auditor to review its processes and has begun refunding its customers. The refunds cover all fees incurred by customers from going into their unarranged overdraft.
“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,” said Sara Bennison, chief marketing officer at Nationwide.
The building society said it removed unarranged overdraft charges in November, meaning the issue will not occur again.
Main image credit: Getty