Nationwide is to pay thousands of customers a collective £6million in refunds after breaking overdraft rules.
The Competition and Markets Authority (CMA) said the lender failed to ensure customers with personal current accounts received a text alert before entering into their unarranged overdraft.
It said Nationwide broke Part 6 of the CMA’s Retail Banking Market Investigation Order 2017, which ensures customers receive a warning - allowing them time to take action before being hit by unexpected charges.
Nationwide admitted contravening the order 20 times, affecting over 320,000 customers. Some of the problems date as far back as February 2018 from when the Order was introduced.
It comes just weeks after the building society announced plans to double its arranged overdraft rate for some customers, by imposing a new single rate of 39.9% across its adult current account range.
That's ahead of new regulator rules to clamp down on complex overdraft charging structures which should be in force by 2020.
Adam Land at the CMA, 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."
The CMA is also publishing a letter today to Nationwide about a breach of the Northern Ireland Personal Current Account Banking Market Investigation Order 2008.
Nationwide informed the CMA in June 2019 that, between June 2018 and June 2019, it had failed to provide leaflets on switching personal current accounts to around 120,000 customers in breach of that order.
Although the order was revoked before the CMA was notified of the breach, Nationwide said it will now provide affected customers with those leaflets.
Who is affected?
Anyone that's fallen into an unarranged overdraft in the past 18 months could be affected - providing you were charged for it.
How much could I be paid?
Nationwide said around 320,000 customers are affected - with some of the problems dating as far back as February 2018. A total of £6million is being paid out - equating to around £18.75 each.
What to do if you're affected
Nationwide will be expected to contact all customers affected as a result of today's findings, however you can get in touch with Nationwide directly here if you don't hear from the bank in writing.
