Small businesses have wrongly been told they needed to open current accounts in order to secure a loan from banks
Competition authorities have censured HSBC and First Trust banks for wrongly requesting small and medium sized businesses (SMEs) to open a current account in order to secure a loan.
In 2002 regulators prohibited banks and major UK lenders in the UK from the practice known as “bundling”.
However the Competition and Markets Authority (CMA) said First Trust and HSBC had “breached these undertakings”.
CMA chief executive, Alex Chisolm, called the breach a “serious matter” but added that all banks had “recognised the importance of complying with the undertakings”.
He further added “We have directed First Trust Bank and HSBC on the actions they must take to immediately correct the situation – so that it is clear to both their staff and their SME customers that obtaining a business loan is not dependent upon opening an account”.
First Trust told the CMA it had identified six cases in which the bank had required an SME customer to open a current account in order to get a loan. As a result it wrote to these customers to tell them they did not need to open a current account after all.
Economic Secretary to the Treasury, Andrea Leadsom said she “welcomed” the CMA’s move to “bring these unacceptable practices to an end”.
HSBC said: “Since the issue was discovered, we have been working with the CMA to implement a plan ensuring full compliance with the requirements, and will be regularly reporting back to the CMA”.
The bank further added “As part of our audit review, where we find a customer has received the wrong information, we will take action to ensure they have the right information going forward.”