You are here: Home - Saving-Banking - News -

Nationwide to refund £900,000 to customers

0
Written by: Paloma Kubiak
06/02/2020
Around 70,000 Nationwide customers will share a refund of £900,000 after the lender broke rules in the way it warned overdraft users about going into the red.

Nationwide Building Society has been told to repay nearly a million pounds to thousands of current account customers as it failed to correctly warn them they would be charged for entering an unarranged overdraft.

Under Competition and Markets Authority (CMA) rules, customers with personal current accounts must receive a text alert warning of fees before banks charge them for an unarranged overdraft. This gives people time to take action and avoid unexpected fees.

While Nationwide did send text alerts, the messages didn’t contain a warning that customers would be charged.

The CMA said around 70,000 people were affected, and they were already known to Nationwide as having difficulty managing their accounts. The refunds will cover all fees incurred by customers going into an unauthorised overdraft, though the CMA doesn’t have the power to impose a fine.

This is the second time in just six months that Nationwide has breached this same banking order. In August, it was told to refund £6m to current account customers.

Adam Land, senior director of remedies, business and financial analysis at the CMA, said: “Banks and building societies that fail to send customers text alerts saying they will be charged if they enter an unarranged overdraft are breaking the rules. The fact that Nationwide is a repeat offender makes it even more serious.

“Following our action, it will now repay all affected customers, and quickly.”

‘This issue will not occur again’

The CMA added that Nationwide now has an independent auditor in place to review its processes.

Sara Bennison, chief marketing officer at Nationwide, said: “The CMA Directions, issued to Nationwide in August 2019, required the Society to complete an independent review of its processes in relation to text alerts. While all members received their texts on each and every occasion, this review identified that alerts sent to members who were in Collections did not explicitly state that they would be charged an unarranged overdraft fee.

“While these members haven’t been overcharged, we appreciate these texts are designed to help people avoid unarranged overdraft charges, so we apologise that on this occasion we didn’t meet the high standards we set ourselves. We are contacting impacted members and will be automatically refunding the charges back into their account.

“From 11 November 2019, the Society removed unarranged overdraft charges, so this issue will not occur again in the future.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week