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HSBC and Santander customers set for refund

People who bank with HSBC and Santander are in line for a refund after the finance watchdog ordered them to pay compensation for failing to alert customers who went into the red.

The Competition and Market Authority said they broke rules by not sending text messages allowing people to avoid unarranged overdraft charges. HSBC said it would refund a total of £8m to 115,000 customers.

Santander also said it would comply, but has not worked out the cost yet. The CMA said the banks first breached the rules in February 2018.

It said the refunds would cover all fees incurred by customers who had gone into unarranged overdrafts without being warned in time to take action.

The competition watchdog added that it was requiring the two banks to have their compliance with the rules checked independently.

HSBC was found to have committed two breaches of the CMA’s Retail Banking Market Investigation Order.

HSBC broke the rules because it had a policy of not disturbing customers after 22:45, the CMA found.

This meant that if customers went overdrawn between that time and 23:45, when balances were calculated, they were not alerted by text.

Santander broke the rules six times. It said: “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. We are now working to identify and refund all affected customers as quickly as possible.”

This is not the first time that the CMA has taken action against a financial institution over this issue. In August, it ordered Nationwide building society to refund £6m in charges to 320,000 overdrawn customers after failing to send them the correct text warnings. The CMA found that Nationwide had broken rules over text alerts 20 times.