Fannie Mae-No Politics (FNMA)

[10bambam]

HSBC and First Trust Bank have been found guilty of breaching competition rules by telling small businesses they must open a current account in order to take out a loan. The practice, known as bundling, has been prohibited since 2002 but the Competition and Markets Authority said it had uncovered evidence the two banks had breached these rules.

The findings came following an audit of the two banks and six others that have agreed not to bundle current accounts and loans. These are Bank of Ireland, Barclays, Clydesdale Bank, Danske Bank, the Lloyds Banking Group and The Royal Bank of Scotland Group.

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

Earlier this year, in a letter to the OFT, which was at the time overseeing the investigation, HSBC said “some HSBC staff will have informed SME customers that it was a requirement to take out a BCA [business current account] in order to obtain a loan.” The bank was also found to have been publishing misleading statements on its website that suggested to customers that they had to open a current account in order to get a loan.

The bank said in a statement: “HSBC takes its responsibility to UK business seriously and we regret that the bank has not been fully compliant with ‘bundling’ undertakings. Since the issue was discovered, we have been working with the CMA to implement a plan ensuring full compliance with the requirements, and will be regularly reporting back to the CMA.”

First Trust Bank, the Northern Irish operation of Allied Irish Banks, told the OFT earlier that it had uncovered six cases of bundling. During the course of the audit it then uncovered a further five cases, which it reported to the CMA. It said it has written to all affected customers.

Andrea Leadsom, the economic secretary to the treasury, said the government welcomed the report.

“Key to the government’s long term economic plan is increased competition and choice in the banking sector, so all customers can get the products that are right for them,” she said. “That’s why the government asked regulators to take decisive action to end the anti-competitive actions of some banks, who refused to lend money to smaller businesses unless these firms opened current accounts with them.”

The audits also revealed that at two other banks there was low awareness among relevant staff that customers could not be expected to take out a current account in order to get a loan. All eight banks will be required to carry out another audit and report to the CMA again by July 2015. The CMA is also asking any SMEs who think they might have been the victim of bundling to get in touch with it.

http://www.theguardian.com/money/2014/oct/22/hsbc-first-trust-bank-guilty-breaching-competition-rules