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The UK’s competition watchdog has hit out at three of the biggest high-street banks for "significant failures" in transaction history reporting for personal and business customers switching banks.
The Competition and Markets Authority (CMA) has found breaches of Part 5 of the Retail Banking Market Investigation Order 2017 and has publicly censured three banks who have failed to comply.
Part 5 of the Retail Banking Order requires banks to send payment transaction histories to any business current account (BCA) customer with a turnover of less than £6.5m or any personal current account (PCA) customer who closes their account (unless an exception applies).
Reasons why this is important include concerns from consumers about losing their transaction history and the possibility that it could pose a problem for access to credit for small and medium-sized enterprises, the CMA says.
Nationwide failed to provide an estimated 51,185 payment transaction histories to former PCA holders between February 2018 (when Part 5 of the order came into effect) and May 2023, according to the CMA.
This was due to Nationwide putting "no trace" markers on certain PCAs where it was believed that addresses were out of date.
However, on removing the "no trace" marker Nationwide failed to check that affected customers received information on how to download payment transaction histories.
Firms are required not only to make payment transaction history available for free and for download at the time of closure, but also provide notice to the customer of how to download it.
“These breaches of the Order represent a substantial failure by Nationwide to ensure that it complies with all of its regulatory obligations,” the CMA writes.
The CMA said that it is concerned that Nationwide failed to implement an effective process to ensure that customers who closed their accounts would be provided with notification of how to download their payment transaction history.
HSBC also failed to send an estimated 12,200 payment transaction histories to former BCA holders between February 2018 and November 2022, the CMA found.
This was due to weaknesses in its control environment and individual human errors among its staff, the competition regulator said. It also noted that this weakness in controls meant that HSBC was unable to determine exactly how many payment transaction histories it failed to send.
"The CMA considers it unacceptable that a large, regulated entity such as HSBC manifestly failed to implement an effective process to ensure that BCA customers that closed their accounts would be provided with their Payment Transaction History in accordance with its legally binding obligations," said the CMA's report.
In addition, the CMA complained that the inability of HSBC to determine the scale of these breaches due to the inadequacy of its systems and processes is a further concern.
"These breaches represent a significant failure, not only in implementing processes which will comply with its legal requirements, but also of management oversight and accurate reporting to the CMA."
An HSBC spokesperson told VIXIO: “We are sorry some of our former customers did not receive their Payment Transaction Histories, required by the CMA, when they closed their Business Current Accounts.”
“As soon as we discovered the issue, we took various steps to improve our processes in order to avoid this happening again.”
TSB, meanwhile, failed to send 105,607 payment transaction histories to former BCA and PCA customers between April 2022 and March 2023.
This was due to a change being made to its internal procedures without the appropriate governance checks being followed.
TSB became aware that it was not sending payment transaction histories on March 8 this year. Subsequently, it confirmed internally that it had breached the order on March 30 before informing the CMA on April 19, which did not impress the regulator.
The CMA noted in its letter, under Article 56 of the order, firms must report non-compliance to the CMA within 14 days of becoming aware that they are not compliant.
“These breaches represent a significant failure, not only in carrying out processes which will comply with legal requirements, but also of management oversight,” the CMA has said.
Going forward, the CMA warned that it will monitor the banks closely and that tougher enforcement may be required should they continue to fail to comply with the order.
