The rules came into force in early 2018 and require current account providers to notify account holders by text message before charging any overdraft fees. This then provides the account holder with the chance to rectify the situation before having to pay those charges.
However, Nationwide was found to have repeatedly broken the Retail Banking Market Investigation Order 2017, with around 320,000 affected customers. In a fifth of cases, customers did not receive a text message at all, with the remainder receiving a text which did not make clear that they would incur charges if they didn’t act immediately.
Nationwide will refund the fees to any affected customers that are still with the mutual, while those that have left will be sent a cheque. It has been ordered to review its practices to ensure it does not break the rules again, with any new processes requiring an audit from an independent body.
Adam Land, senior director for remedies, business and financial analysis, said that the texts were a “key” measure in helping people avoid unexpected fees, and its action made clear that Nationwide needed to fix this as a matter of urgency.
He continued: “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.”
Nationwide also admitted failing to provide leaflets on switching current accounts to around 120,000 customers in Northern Ireland, breaching a separate order from the CMA. It has pledged to provide affected customers with those leaflets.