HSBC rapped for UK small business lending breach

LONDON, Oct 22 (Reuters) - Britain's competition watchdog said HSBC had forced some small businesses to open an account with the bank to obtain a loan, breaking commitments made by banks to end the practice.

The Competition and Markets Authority said on Wednesday HSBC and First Trust Bank, which is part of AIB Group, had to immediately correct the practice and make it clear to staff and SME customers that obtaining a business loan is not dependent upon opening an account.

British banks said in 2002 they would stop the practice - known as 'bundling' - to safeguard customer choice, the CMA said.

"We regret that the bank has not been fully compliant with 'bundling' undertakings," a spokesman for HSBC said, adding the bank was working with the CMA to fully comply with the requirements.

The CMA plans shortly to start an investigation into Britain's personal current account and SME banking markets. (Reporting by Steve Slater; Editing by Elaine Hardcastle)