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The UK competition regulator has issued a letter of concern regarding various breaches of the Retail Banking Market Research Order 2017 that have occurred between 2017 and 2022.
The Order is CMA’s initiative to increase competition and customer engagement within the retail banking industry and to drive the development of new services.
Among other initiatives, the regulation aims to make it easier for business and individual customers to compare different providers, including prices and quality of service.
This order includes steps to streamline the process of switching your current account and improve our current switching service.
This is in addition to the measures targeted at SME Banking. The order requires banks to provide price quotes and eligibility indicator tools, giving small businesses the same comparison capabilities as private bank customers.
Banks must agree and adopt a set of key standards for corporate checking accounts and how small businesses can open accounts. Locking in retail banking monopolies among incumbent banks.
The bank violated part 8 of the order when it failed to display the correct annual rate (APR) on its small business lending products between 2017 and 2022.
As outlined in Section 8 of Section 32 of the Order, all information regarding APRs for SME loans must be available to third parties (such as price comparison websites) and must be accurate, comprehensive and , up-to-date.
In a letter issued today to NatWest, the CMA clarified: ulster bankGroup bank, which offers small business lending products, did not display information on APRs for part of the five-year period.
In addition to this violation, the bank was misrepresenting the interest rate component of the APR instead of the entire APR.
The CMA letter said, “NatWest’s failure to provide price comparison websites and other third parties with the correct annual rate for Ulster Bank’s variable rate loans has led to small businesses opting for more expensive loans than alternatives. It is possible that it did.”
NatWest found that most of the 1,018 SMEs who took out loans with Ulster Bank during this period were existing customers dealing directly with the bank, yet SMEs new to the bank had no access to loans through third parties. I am aware that you may have obtained information. .
The bank identified 97 cases where small businesses may have been presented with the wrong APR because they used a third-party site that provided inaccurate information.
We notified the CMA of this breach on July 29, 2022.
The regulator determined that a Danish banking company was in breach of Part 2 of the order when it failed 45 times to ensure the accuracy of information on business current account products.
Part 2 of the Order requires the UK’s largest banks to provide “accurate, comprehensive and up-to-date product and service information” and to make this information continuously available through open banking APIs. We sought.
The bank failed in this regard when it presented customers with incorrect rates and charges 42 times.
This failure lasted for four years from January 2018 to July 26, 2022.
The company violated the order in three instances between October 2018 and July 26, 2022, in which it misrepresented information about the benefits and features of its business checking accounts.
A letter from the CMA to Danske Bank states: “
For example, businesses expecting to be charged ‘per transaction’ for submitting direct debit files to BACS may be surprised to find that they were charged on a monthly basis. “
Danske notified the CMA of the infringement on July 13, 2022.
The UK was also found to have committed a similar crime by failing to publish accurate information ten times, violating Part 2 of the order.
All 10 instances occurred between March 10, 2017 and October 7, 2022.
In one breach recorded between June 3, 2020 and February 26, 2021, the bank’s transaction fee rate for non-GBP cash withdrawals and debit card payments in foreign currency was 2.99% instead of the correct 2.99%. , which was an inaccurate estimate of 2.75%.
The breach relates to the bank’s FlexAccount, FlexDirect, and FlexBasic personal checking products.
On another occasion from February 1, 2022 to May 17, 2022, the credit interest rate on the bank’s FexOne product was incorrectly estimated at 0.1% when it was actually 0.25%. rice field.
Another breach between 29 January 2020 and 26 February 2021 showed non-UK ATM fees of 1 instead of zero for all the above products.
Since this was a similar crime, the CMA cited the same response it gave Danske Bank, stating that inaccurate data “enables consumers to make decisions they would not have made had they had access to the correct information.” I said it could go down.”
CMA was notified of the breaches by the banks on May 27, 2022 and October 14, 2022.
In all three letters, the regulator said it “does not believe it is appropriate to take formal enforcement action with respect to these breaches at this time,” but will continue to support future compliance by NatWest, Danske Bank and Nationwide. added that it will be closely monitored.
NatWest has taken financial remediation of all 97 cases in which SMEs were misinformed and has contacted 929 affected existing customers to explain the violation.
We are also reviewing and restructuring our lending process with third-party providers while engaging our business teams in relevant training sessions.
Danske Bank is also actively responding. We are creating and implementing data management tools, modifying product governance frameworks, and changing management procedures.
We also perform a four-eyed review of all business checking product data uploaded to the Open Banking API. Among other safeguards.
Similarly, Nationwide is currently reviewing its product change management checklist process, among many other reforms.
This includes developing an individual checking account product information API viewing utility and introducing a monthly review of product information using open data APIs to ensure accuracy and consistency.
