RBS Group, which includes all three banks, broke a legal order requiring banks to send customers text alerts before they charge them for using an unarranged overdraft.
The banks failed to enrol 179,000 customers into a programme of alerts within the required time, when their accounts matured from youth accounts (which aren’t subject to overdraft charges) to adult current accounts. Under the rules, banks need to do this within 10 days of when the charges start to apply.
As a result of this breach, 36,000 of these customers were charged for going into or attempting to go into an unarranged overdraft even though they hadn’t been sent an alert.
RBS Group has now agreed to pay out a total of £2.2 million in refunds to these customers, which includes 8% interest. This works out at an average refund of roughly £60, though actual amounts will depend on individual cases.
RBS is one of a long list of providers to be rapped over this issue – with Nationwide, Metro Bank, HSBC and Santander all paying out refunds over the last year.
It will now need to keep the Competition and Markets Authority and Financial Conduct Authority informed as it pays refunds to customers.