(Alliance News) - The UK Competition & Markets Authority on Friday said that HSBC Holdings PLC and Banco Santander SA have agreed to refund customers after they broke a new rule requiring them to alert customers for unarranged overdrafts.
The monopoly regulator said the lenders failed to send customers text alerts before charging them for going into unarranged overdraft.
HSBC has been found to have broken the rule twice and has agreed to refund GBP8 million to 115,000 customers. Santander was found to broke the rule six times and has also agreed to issue refunds, but is yet to confirm the number of customers affected and how much it will refund.
The CMA said the refunds paid by the banks will cover all fees incurred by customers from going into unarranged overdrafts where they had not been warned beforehand by the required text alerts.
The breaches first occurred in February 2018, when the new text alert for unarranged overdraft rule came into effect, the regulator added.
CMA has also ordered HSBC and Santander to undertake an independent review of their compliance with part 6 of the Competition & Market Authority's Retail Banking Market Investigation Order for the period between February 2018 and December 2019.
The part 6 rule ensures customers receive text alerts before banks charge them for going into an unarranged overdrafts.
HSBC shares in London were trading 0.5% lower at 578.10 pence each on Friday morning. Santander shares in Madrid were down 0.6% at EUR3.55 each.
By Tapan Panchal; tapanpanchal@alliancenews.com
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HSBC Holdings (HSBA)