Monzo users ‘kept in dark’ over credit limit charges for three years
Monzo is being monitored by the competition watchdog after it breached a banking rule over a three-year period, meaning customers may not have known the full cost of going into the red.
Current account customers should be given information about the maximum charge payable each month for going over or attempting to exceed a pre-agreed credit limit.
This is known as the Monthly Maximum Charge (MMC) which helps customers know exactly how much they’ll need to pay for going into an unarranged overdraft. It should also make it easier to compare current account costs at other banks and building societies.
However, the Competition and Markets Authority (CMA) revealed that Monzo breached this banking rule as it failed to publish the charge in its fee information document for three years; between 25 October 2018 and 19 November 2021.
It said it was concerned that Monzo personal current account customers may not have seen the charge as it wasn’t displayed each time it published fees and charges for exceeding a pre-agreed credit limit. Under the rule, the charge should be disclosed each time information relating to that charge is published.
Further, the CMA highlighted that Monzo’s internal audit report failed to spot that it wasn’t compliant with the MMC which was introduced as part of a banking shake-up in 2017.
However, the watchdog noted that Monzo has taken steps to end the breach and prevent it occurring again.
Monzo has been compliant since 19 November 2021, and it implemented a new procedure where terms and conditions are subject to an internal annual review to ensure it’s being compliant.
Colin Garland, director, remedies, business and financial analysis at the CMA, said: “Given the action already being taken by Monzo Bank, the CMA does not consider it appropriate to take further formal enforcement action in relation to this breach at present.
“The CMA will monitor Monzo Bank’s future compliance closely.”
Monzo Bank’s current maximum monthly charge is £15.50. A Monzo spokesperson, said: “As the CMA has recognised, this is a legacy issue that we addressed last year and we have taken steps to make sure it does not happen again.”