The CMA has ordered Nationwide to hand back £6m to current account customers after it broke rules which state that people should receive a text alert before banks charge them for unarranged overdrafts. The aim of the text message is to give customers time to take action to avoid unexpected charges.

The CMA found Nationwide broke part six of the regulator’s Retail Banking Market Investigation Order 2017. The order ensures current accounts customer receive a text alert before being charged for an unauthorised overdraft.

Nationwide admitted contravening the order 20 times, affecting more than 320,000 customers going back to February 2018.

The CMA noted that in more than 80 per cent of the incidents identified the customer concerned received a text alert from Nationwide in relation to the risk of a payment not being paid which, if acted upon, would have resulted in the customer avoiding the charge. However, these texts failed to make clear to customers that they could incur charges by failing to take action, which is an important part of the order.

The CMA has told Nationwide to take immediate action and improve its practices and compliance with the order.

Adam Land, CMA senior director for remedies, business and financial analysis, said: “The text alerts we ordered banks to send to customers if they are about to slip into an unarranged overdraft are key to helping them avoid unexpected fees. Nationwide failed to do this on numerous occasions and our action today makes it clear they must fix this as a matter of urgency. It’s imperative that these problems are sorted out immediately and that they don’t occur again.

“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.”

A Nationwide spokesperson said: “The CMA Retail Banking Market Investigation Order 2017 requires firms to send consumers text alerts where they are at risk of incurring unarranged overdraft, paid and unpaid transaction fees, giving them an opportunity to avoid the charges.

“Nationwide has sent over 19 million alerts since the rules were introduced. We have engaged proactively with the CMA to review these incidents, which were first reported to them in 2018 and the wording was corrected in November 2018. We have implemented improvements and additional controls to ensure this does not happen again. These controls are currently being reviewed by independent third parties.

“As an organisation that prides itself on service, we apologise for these incidents and any inconvenience caused. We have started the process for refunding members and will ensure no one is left out of pocket.”