CMA “disappointed” in Metro Bank, despite lender’s £11m remediation offer

Metro breached an order that requires banks to ensure customers have time to act and avoid unexpected fees, by sending text alerts warning about unarranged overdraft charges before the money is taken.

After an investigation, The Competition & Markets Authority (CMA) today (April 20) said that although texts were sent, these did not inform customers they would be charged. This breach has been continuing since February 2018, when an order setting the requirement was introduced. Some of these alerts were sent later than they should have been.

Metro is not the only lender that’s failed to meet exacting standards on unarranged overdrafts - Nationwide had to refund £6m to over 320,000 customers in 2019, and had to refund another £1m to 70,000 customers earlier this year.

Metro’s own recent failings meant the bank breached Part 6 of the CMA’s Retail Banking Market Investigation Order 2017.

As well as refunding £10.5m in fees, Metro Bank has offered to pay back eight percent interest on the charges, bringing the expected total remuneration to around £11.4m. It will also consider reasonable claims for extra costs incurred by affected customers.

Adam Land, CMA senior director for remedies, business and financial analysis, said: “The text alerts we ordered banks to send to customers have been crucial in helping people avoid unexpected fees from entering an unarranged overdraft.

“While it is disappointing to see so many customers being charged wrongly, Metro Bank’s commitment to refund those affected – and to cover interest charges and consider claims for extra costs suffered – will put this right.

In a separate announcement, the CMA said it was disappointed that Metro Bank had breached the order twice; by failing to include a warning in alerts that unarranged overdraft charges would be imposed, and by delivering some of these alerts after 10am. In total, 128,564 customers were affected.

Metro Bank aims to refund affected customers by the summer. The lender has also agreed to keep both the CMA and the Financial Conduct Authority, which took on responsibility for alerts from 18 December 2019, informed of its progress in refunding customers.

David Thomasson, chief commercial officer at Metro Bank, said: “We are very sorry that we didn’t include all the information we should have done on our overdraft text alerts, and that on certain occasions some customers did not receive these alerts before 10am as they should have done.

“This isn’t the level of service that we pride ourselves on providing and we are now contacting any customers who have been impacted to put things right for them as quickly as possible.”