Four significant high street banks fell short of adhering to banking regulations designed to keep customers informed, according to the competition watchdog.
Misinformation supplied by the banks about their products or services included HSBC maintaining a listing of 167 now-closed branches as still operational.
The Competition and Markets Authority (CMA) has directed HSBC to implement changes, and HSBC, Lloyds, TSB, and Allied Irish Bank (AIB) have been handed public letters.
Under the retail banking market investigation order of 2017, banks and building societies are obliged to adhere to specific rules when educating customers about their products and services.
This entails displaying correct interest rates for loans and accurately conveying the proper locations for bank branches and ATMs..
This order also introduced “open banking”, an initiative that established high standards for clear and secure data sharing for retail banking services in the UK.
It allows a broad gamut of data on products and services to be accessed by third parties, facilitating the creation of apps and improvement of services, and aiding individuals in identifying the right financial product for their needs.
The watchdog asserted that HSBC, Lloyds, TSB, and AIB failed to provide accurate data regarding their products or services.
They cited HSBC’s failure to maintain up-to-date information about its branches, with 167 closed branches incorrectly listed as open and two operational branches not appearing on the list at all.
HSBC has been caught out for not maintaining accurate and current annual rates for business loans and overdrafts on its website. Additionally, the banking giant misinformed some customers about the maximum charges for entering unarranged overdrafts on personal accounts.
TSB also slipped up by not revealing the cap on charges for customers entering unarranged overdrafts on their personal accounts.
AIB was found wanting as it did not provide the correct annual rates for certain loans and overdrafts through open banking services and on its own website.
Lloyds Bank dropped the ball by failing to disclose the locations of 363 ATMs via open banking platforms.
In response to these breaches, Lloyds, TSB, and AIB have all pledged to overhaul their practices, with commitments ranging from bolstering internal processes to enhancing senior management oversight, updating checklists, and retraining staff, according to the CMA.
HSBC, which the CMA views as having more significant breaches in this instance, has implemented additional measures to avert future issues.
The CMA has laid down the law with HSBC, issuing detailed directions that include an action plan to guarantee compliance going forward.
Dan Turnbull, the CMA’s senior director, emphasised the importance of trust and accuracy in banking, stating: “People deserve banks they can trust to serve them well.”
“Having correct information is essential when making important decisions about our finances. Banks handling our hard-earned money should have adequate processes in place to ensure this happens.”
The UK’s competition watchdog has slapped HSBC with a £1.6 million fine for failing to meet its obligations to provide accurate information to its customers. A spokesperson for the Competition and Markets Authority (CMA) said: “It’s disappointing that seven years on, we have to put in place formal enforcement measures to secure better compliance from a major bank like HSBC which, yet again, is in breach of the rules.”
The spokesperson added: “The CMA will continue to closely monitor all banks’ compliance to ensure customers can clearly and confidently manage their finances.”
Since the retail banking market investigation order 2017 has been in force, the CMA has written publicly to banks 35 times and issued five sets of legally binding directions, to help banking consumers receive correct and accurate information.
The CMA confirmed that customers have received more than £47 million in refunds to date. An HSBC UK spokesperson said: “We are sorry for errors on our part which caused these breaches.”
“When we discovered them we reported these to the regulator. We have taken steps to avoid a repeat of these issues in the future.”
