High street lender HSBC has been given a warning by the competition watchdog after admitting providing incorrect information on fees, charges and rates under its open banking agreement.
The Competition and Markets Authority (CMA) dealt a rebuke to the banking giant after uncovering breaches of its responsibilities under open banking – which allows third-party financial service providers open access to consumer banking, transaction, and other financial data from lenders – on more than 50 different occasions over the past five years.
Its failure to report accurate information – and in some cases not providing the required information – risked leading customers to make the wrong decisions by leaving them potentially with an incorrect or incomplete understanding of products.
HSBC self-reported the breaches in June last year and has since taken action to address them.
The CMA said it follows previous open banking data breaches by the bank.
In a letter to HSBC’s retail banking arm, the regulator said: “This context makes the breaches … especially disappointing.”
It said it would not be taking official enforcement action given HSBC’s moves to “put things right”, but stressed it will monitor HSBC’s compliance “closely”.
Since open banking was launched in 2017, the UK’s biggest banks have agreed to make their data more available in a more standardised format – seen as a big step forward to allow more so-called challenger banks to enter the market and allowing customers to shop the market better.
Open banking uses data which companies hold about people to help them find better deals, based on that individual’s actual behaviour, for example people can find a better bank account based on how often they are actually overdrawn or in credit.
Last week, the CMA marked the five-year milestone of open banking, cheering the success in getting the six biggest banking groups in the UK – Barclays, HSBC, Lloyds, Nationwide, NatWest, and Santander – in meeting all the requirements under the open banking roadmap.
It said active users of open banking in the UK had risen to 6.5 million.
But the HSBC breaches suggest the implementation of open banking has not been entirely smooth.
In the letter, Dipesh Shah, director of remedies, business and financial analysis, cautioned: “HSBC must ensure that it complies with the order in full.
“The CMA has powers to issue directions to businesses that fail to comply with its orders.
“However, given the action that has been, and is being, taken by HSBC, the CMA does not consider it appropriate to take further formal enforcement action in relation to these breaches at present. The CMA will monitor HSBC’s future compliance closely.”
Alex Haffner, a partner at law firm Fladgate, said: “Open Banking is of great importance to the development of the UK’s fintech industry, particularly for those ‘challenger’ companies who rely on the opportunities it offers to plug into the large banks’ networks.
“It is for that reason that the CMA takes its responsibilities in enforcing the open banking provisions of the retail banking order very seriously.”