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CMA steps in

Clydesdale Bank rapped over loan scheme breach

Clydesdale Bank

Clydesdale: taking steps to become compliant

Clydesdale Bank has been told to stop forcing customers to take out business current accounts in order to access Covid loans backed by the UK Government.

The Competition and Markets Authority (CMA) found it was in breach of “bundling” rules – when customers are obliged to open a business current account with their loan provider.

The CMA said this practice restricts competition and limits choice as small businesses could then be stuck paying for a business current account that doesn’t meet their needs.

The watchdog’s action comes after it found that Clydesdale had not complied with certain aspects of these rules, and follows similar recent action against Lloyds Banking Group.


The CMA said Clydesdale, now part of Virgin Money, had required customers who were running their business through a personal current account with the bank to also open a business current account in order to obtain a loan through the UK government’s Bounce Back Loan Scheme.

The scheme was launched in May last year and enabled small businesses to apply for up to £50,000 from the government if they were struggling due to the coronavirus crisis.

The CMA said it was aware that the affected Clydesdale customers would not initially be charged for the business current accounts.

“However, small business customers may have kept these accounts open for longer than the initial fee-free period rather than opening a more suitable account with another provider,” it added.

In December, Clydesdale voluntarily wrote to all affected customers to inform them that they are not required to retain the Clydesdale business current account for the whole duration of the loan, and offered them the option of switching to a fee-free loan servicing account.

In total 55 Clydesdale customers and 112 Yorkshire Bank customers were affected.

A Clydesdale Bank spokesperson said the issue had arisen as the applicants concerned had only set their businesses up recently so it had been unable to process the necessary fraud and money laundering checks.

“To help make sure they swiftly received the loan funds, we asked them to open a business current account to let us progress their application,” said the spokesman.

Eight of the UK’s largest banks are subject to legal undertakings prohibiting bundling.

Adam Land, a CMA senior director, said: “The scheme provides critical support to small businesses during the pandemic.

“We are acting to ensure that the large banks do not restrict the choices of small businesses by bundling loans and business current accounts. We are pleased that Clydesdale is now taking the steps necessary to become compliant.”

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