By Kristy Dorsey
Clydesdale Bank has become the latest to be reprimanded for forcing customers to take out business current accounts to access Covid loans backed by the UK Government.
The Competition & Markets Authority (CMA) said the practice, known as “bundling”, put Clydesdale in breach of legal undertakings that prohibit it and seven other of the UK’s largest banks from requiring a business account to apply for any loan. In September, Bank of Scotland owner Lloyds was similarly censured for forcing thousands of pandemic-stricken small business owners to open current accounts.
The competition watchdog said Clydesdale breached its undertakings by requiring customers who were running their business through a personal account to also open a business account to obtain a bounce back loan. The bounce back scheme was introduced by the Treasury in April to provide loans of between £2,000 and £50,000 to small and medium-sized firms.
Bank of Scotland owner ‘forced’ firms to open business accounts
The CMA said although customers were not initially charged for these business accounts, they may have kept them open for longer than the initial fee-free period, rather than opening a more suitable account with another provider.
Clydesdale has now written to all affected customers saying they are not required to retain their business accounts for the duration of their loans. This included 55 of its own customers and 112 customers of its English counterpart Yorkshire Bank.
“We are acting to ensure that the large banks do not restrict the choices of small businesses by bundling loans and business current accounts,” CMA senior director Adam Land said. “We are pleased that Clydesdale is now taking the steps necessary to become compliant.”
Clydesdale is owned by Virgin Money UK, which was formed by the 2018 merger of Virgin and CYBG, then-owner of Clydesdale and Yorkshire Banks. The Clydesdale name is due to be replaced by that of Virgin Money by the end of next month.