CMA censures Barclays for SME undertaking breach

CMA has censured Barclays, and directed it to pay £1,910.55 to affected SMEs for making them pay for accounts they did not need. The bank had bundled products together, which had the effect of preventing SME customers  with Business Premium accounts from making transfers to or from non-Barclays accounts, if they did not have a current account with the bank, and telling Notice Deposit Account customers they needed to open current accounts with the bank. CMA determined that the bank breached undertakings  that it, together with several other banks, made to the Government  under s.88 of the Fair Trading Act 1973, and that took effect on 1 January 2003.  The breaches took place over several years and lasted until 2018.

Barclays explained that its actions on the BPAs had been designed to mitigate fraud risks, and it had not realised the inadvertent breach of the Undertaking, while on the Notice Accounts, customers could in fact operate without a current account, but the Barclays literature was misleading.

The CMA has directed Barclays to:

  • immediately change their practices to meet their Undertakings obligations;
  • write to affected SMEs to notify them they do not require the accounts;
  • update internal polices and procedures in relation to the undertakings and conduct an internal annual compliance review of related policies and procedures; and
  • appoint an independent body to carry out annual assurance audits by 31 July 2020, updating the CMA on progress.

Barclays has already take steps to address the issue, including making payments to those affected.  The Direction serves as a reminder to banks to ensure they consider the undertaking when making adjustments to the way in which they offer accounts to SMEs.

Emma Radmore