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RBS to offer £2.2m in refunds after overdraft breaches

RBS will offer £2.2m in refunds to 36,000 customers after it breached rules, by charging customers for going into or trying to go into unarranged overdrafts without first sending alerts.

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The bank has made the pledge after breaching part six of the Retail Banking Market Investigation Order 2017, in two ways, in how it enrolled youth accounts into adult personal current accounts.


A public letter to RBS from the Competition & Markets Authority (CMA) published today (May 28) reveals the bank failed to enrol adult personal current accounts (PCAs), which were previously youth accounts, into a programme of alerts within 10 working days. This is required by the order.


This first breach affected around 179,000 customers and it led to a second, when RBS charged about 36,000 customers unarranged overdraft fees without first sending an alert. These customers did not receive them as they were not enrolled in the programme.


However RBS has committed to put things right by fully remediating customers and providing eight percent interest. The offer comprises £1.9m before interest and around £2.2m after. The bank will also consider any “reasonable claims” for extra costs suffered due to the charges. RBS is aiming to refund customers by this summer.


The CMA’s investigation into RBS follows many other similar cases. In the last two years, the authority has secured more than £47m in refunds for customers whose banks failed to properly warn them about unarranged overdraft charges.


Santander recently put aside £17m to refund customers for six breaches of the order, announced by the CMA last year. This will impact up to 470,000 customers who will all be refunded in full. This is on top of £2m in refunds by Santander already announced by the CMA in May 2019.


Since 2018, the CMA’s action has also led to refunds for customers from three other banks and building societies of around:

The CMA said the purpose of part six of the order is to ensure personal current account customers receive an alert about unarranged overdraft charges before incurring them.


RBS has 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.


A spokesperson for RBS said: "We apologise to any customers affected, we are contacting those customers to let them know to expect a refund of these charges and we have put systems in place to ensure that this does not happen again."


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