Competition watchdog blasts banks over SME loans

CMA said HSBC breached competition rules and Royal Bank of Scotland and Barclays must improve their act

Nick Goodway
Wednesday 22 October 2014 13:38 BST
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HSBC is in the spotlight for a 2013 case during which prosecutors said that it acted as the “preferred financial institution” for money laundering on behalf of presumably lucrative but highly dubious customers, including Mexican drug cartels
HSBC is in the spotlight for a 2013 case during which prosecutors said that it acted as the “preferred financial institution” for money laundering on behalf of presumably lucrative but highly dubious customers, including Mexican drug cartels

The UK’s competition watchdog has criticised a group of banks, including HSBC, Barclays and Royal Bank of Scotland, over its small and medium-sized businesses lending practices.

The Competition and Markets Authority said HSBC and the Northern Irish bank, First Trust, had breached an undertaking not to force businesses to open a current account with them when they offered them a loan.

Alex Chisholm, chief executive of the CMA, said: “Breach of these undertakings is a serious matter and we have directed First Trust and HSBC on the actions they must take to correct the situation immediately — 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.”

The CMA also criticised RBS and Barclays for “relatively low awareness among relevant staff of this prohibition”.

The regulator can use injunctions against the banks and ultimately fine them for breaching their undertakings.

But the watchdog said all of the banks were taking action to apply the undertakings.

The CMA also told consumers to report to it any concerns they might have about any of the eight banks covered by the undertakings originally made in 2002.

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