CMA warns Monzo not to block account switching
Records of financial transactions can be important evidence when getting a loan or mortgage, and UK banks are legally required to provide this information to customers so as not to create barriers to switching providers. of accounts.
To make the process of switching as smooth as possible, Part 5 of the Retail Banking Market Inquiry Order 2017 (the Order) requires all banks to provide outgoing business and personal account holders a payment transaction history (PTH).
And to further facilitate the process, the Current Account Switching Service (CASS) has also been introduced to automate account switching by redirecting all payment requests and direct debits.
Recently, CASS reported a year-on-year increase in the number of UK account holders using the service. The data revealed that the total number of switches increased by 32% over the previous year to more than 850,000.
As UK account holders migrate from bank to bank in search of more attractive rates and better features, CASS data also revealed that NatWest, Nationwide, Starling, HSBC and Monzo have become the top five banks the most used.
Related: Digital Banking App Provider Ranking Sees Two Competitors Join Top 10
But despite being a net beneficiary of Britain’s growing preference for current account switching, it hasn’t all been good news for a top-five bank.
This week, the UK’s Competition and Markets Authority (CMA) issued legally binding instructions to Monzo in light of its repeated failure to provide transaction histories to customers leaving the bank.
Although it had already been warned of the violations of the order, Monzo informed the CMA in March 2022 that it had not sent PTHs to more than 10,000 personal account holders during the fiscal year. 2021-2022. The bank blamed a coding error for the failure and was only alerted to the problem after a customer who closed his account did not receive a PTH and questioned him.
Read more: UK competition watchdog issues second warning to Monzo for breaching retail banking regulations
As a result, the CMA issued instructions requiring Monzo to ensure this does not happen again, with the bank to review its procedures with an independent body. The instructions are enforceable in court if Monzo fails to comply.
In response to continued concerns from the CMA, Monzo introduced some initial changes. These include the introduction of new automatic alerts to notify staff when the system fails to issue transaction histories and monitoring cases to ensure departing customers receive their transaction histories.
Commenting on Monzo’s breaches of the Order, Adam Land, Senior Director of the CMA, said: “It is simply not enough for a large bank like Monzo to repeatedly fail its customers by failing to follow clear rules.”
See also: Monzo Investigated by FCA Over Alleged Anti-Money Laundering Offenses
Although reforming its existing processes to ensure legal compliance may create a short-term headache for Monzo, ultimately the legal requirement for banks to provide PTH is beneficial for the digital challenger as a l one of the winners of a more transparent checking account switch.
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