Barclays rapped by competition watchdog for forcing accounts on small businesses
Barclays has been told to improve its practices by the competition watchdog after admitting it forced hundreds of small businesses to open current accounts to access loan and deposit services.
The Competition and Markets Authority (CMA) said the bank broke the rules on so-called bundling, whereby banks tell businesses they must open or maintain current accounts before they are able to access other products.
Nine banks – including Barclays – signed up to rules banned this practice in 2002.
The CMA said 816 Barclays small business customers were affected over a period dating back to 2010.
But Barclays did not report the breach until last August.
The CMA said Barclays had already taken steps to stop the problem from happening again, but must also write to all affected customers explaining that they do not need to hold a current account with the lender, and to pay out nearly £2,000 in total compensation to customers for payments they should not have had to make.
It must also appoint an independent body to audit Barclays’ compliance, which will report back to the CMA.
Adam Land, senior director at the CMA, said: “The undertakings are clear that banks must not force small businesses to have current accounts with them, as part of a practice known as bundling.
“Bundling prevents small firms from being able to choose the best banking products for them and can result in unnecessary costs.”
He added: “Small businesses should be confident that they can use loan and deposit account services at Barclays without being told that they are required to hold a business current account they don’t need.”
The CMA found the breaches related to two of Barclays business deposit products -business premium accounts and notice deposit accounts.
Barclays was found to have told customers they needed a current account in order to take out a business premium account between 2014 and 2018, while product literature for notice deposit accounts also wrongly stated this was required, over an eight-year stretch to 2018.
As part of measures to improve its practices, Barclays has said it will update online training for all relevant members of staff, launch a review of all client facing documentation and improve product approval processes.
At present, the CMA cannot impose fines for breaches of undertaking, such as the rules on bundling, but has requested these powers amid proposals for wider reforms under chairman Andrew Tyrie.