The CMA has stopped Lloyds Banking Group forcing their business customers to open business current accounts when taking out Bounce Back Loans.
By ‘bundling’ business accounts, this restricts competition and limits choice because customers may want to hold an account with one provider while using a different bank for their loan.
This action comes after Lloyds Banking Group, (which includes Lloyds Bank and the Bank of Scotland) notified the CMA that it had not complied with certain aspects of legal undertakings designed to protect customers from these anti-competitive practices.
Adam Land, Competition and Markets Authority (CMA) Senior Director of Remedies Business and Financial Analysis, said, “The Bounce Back Loans Scheme is a key part of the support provided by Government to small businesses during the coronavirus (Covid-19) pandemic. It is important that signatories to our undertakings participating in this Scheme do not restrict the choices of small businesses by bundling loans and business current accounts.”
He added, “By forcing businesses to open current accounts as a pre-condition to access this Scheme, Lloyds breached the CMA undertakings it signed, reduced choice and put their customers at risk of being unnecessarily charged.
“Following our action, Lloyds is taking the steps necessary to become compliant and will shortly be contacting existing customers to inform them of their rights.”
Working with the CMA, Lloyds has agreed to a number of actions to become compliant and make sure all affected customers are made aware of their options. This includes writing to customers during September to inform them that:
- if they opened a BCA with Lloyds, they are not required to maintain this account for the purposes of a loan under the Bounce Back Loan Scheme, and can choose to switch to another provider at any time while keeping the loan; and
- they will be offered the option to switch to a fee-free loan servicing account.
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