Two banks will refund millions of customers after the competition watchdog said they broke rules requiring them to contact customers before they become overdrawn.
HSBC and Santander have agreed to refund hundreds of thousands of customers after they broke bank overdraft rules.
The competition regulator, the Competition and Markets Authority (CMA), says that both banks broke a legal order that requires them to send text alerts to customers before they go into unauthorised overdrafts.
HSBC broke the rules twice and is refunding £8 million to 115,000 customers.
Santander broke the order six times and has agreed to issued a refund, but it has not yet worked out how many customers were affected or how much they will be paid.
The CMA says the breaches first occurred in February 2018. The refunds will cover all fees incurred by customers who went into unarranged overdrafts and did not receive a text alert.
Since 2018, banks have been required to send text messages to customers when they go overdrawn to help them avoid paying unnecessary charges.
HSBC says that it will be contacting customers who incurred overdraft charges to refund them.
A spokesperson for 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 says that it is “working to identify and refund all affected customers as quickly as possible”.
A spokesperson from Santander says: “We are very sorry that some customers in certain circumstances were not sent the required overdraft alerts. The introduction of these alerts is a move we welcomed and believe is a real support to customers.
“We have carried out a detailed review to understand why the errors happened and have taken steps to fix the issues.”
The CMA is also directing HSBC and Santander to do an independent check of their compliance with the order between February 2018 and December 2019.
Earlier this year, Nationwide Building Society agreed to refund £6 million to its customers after it failed to send them correct text warnings.
This article was first written by our sister magazine Moneywise.