Santander is refunding around £1.4m to nearly 20,000 customers for overdraft errors.
Most of the affected customers, who have an Essentials or Everyday current account at Santander, have already been refunded.
These customers were charged unarranged overdraft fees without being alerted, thereby violating the established rule.
The breach occurred between 1 February 2018 and 20 February 2019.
During this period, the bank failed to warn customers that they had gone into an unarranged overdraft.
As per the mandate, current account holders have to be enrolled into an automatic alert system within three days of account opening.
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By GlobalData“The underlying cause of the breach as explained to us by Santander was that new account openings for both products were omitted from the process for auto enrolment,” the Competition and Markets Authority (CMA) said.
Users are charged £6 per day for an unarranged overdraft on the Everyday current account, with the monthly fee capped at £50.
There is no overdraft facility for Essentials account, though customers are charged £10 if a payment bounces.
Commenting on the issue, a Santander spokesperson said: “We are sorry that some customers did not receive unarranged overdraft alerts and we are in the process of refunding customers who incurred unarranged overdraft charges as a result.
“We notified the Competition and Markets Authority (CMA) when we became aware of the issue and continue to keep the CMA updated on progress.”
The bank also said that it has adopted procedures to combat such breaches in the future.