HSBC and Santander have agreed to refund customers after a British watchdog found them to have violated a legal order.
The Competition and Market Authority (CMA) said that the two banks failed to send a text alert to customers before charging them for unarranged overdraft.
An unarranged overdraft occurs when a customer pulls out more money from the account without an agreed overdraft.
The bank is mandated to inform customers in such situations, giving them an opportunity to take action and avoid charges.
HSBC breached the rule twice and has to reimburse £8m to 115,000 customers, CMA said.
On the other hand, Santander broke the CMA regulation six times and has agreed to repay the customers. However, it has not yet unveiled the number of affected customers and total refund amount.
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By GlobalDataThe refunded amount will include all fees paid by customers due to the banks’ failures to notify them on unarranged overdrafts.
According to CMA, the first violation occurred in February last year.
As directed, HSBC and Santander will also have to carry out an independent review to assess their compliance between February 2018 and December 2019.
In response, HSBC said: “We apologise to those customers who for different reasons did not receive an alert.
“We will continue contacting customers who incurred overdraft charges as a result of these issues to apologise and provide a refund.”
Santander also apologised for the failures.
“We have carried out a detailed review to understand why the errors happened and have taken steps to fix the issues. We are now working to identify and refund all affected customers as quickly as possible,” Santander noted.
