The Competition and Markets Authority (CMA) has written to online bank Monzo, warning it over KYC breaches to the rules governing customers’ transaction histories.
The FinTech has breached regulations requiring it to send transaction histories to former account holders.
Under rules established in the Retail Banking Market Investigation Order 2017, transaction histories must be sent to at least 95 percent of leaving customers within 10 working days.
The CMA introduced the measure to make switching banks much easier, and to address concerns that customers would lose access to their transaction histories if they changed accounts, making it much harder for them to obtain credit.
However, it is not just some FinTechs that are falling foul of the consumer protection and data rules. In the past few days, the CMA has also written to Bank of Ireland, NatWest Group, and Virgin Money to inform them of similar breaches.
In total, nearly 150,000 customers were not provided with their transaction histories within the mandated timescale – some were sent a few weeks late, while others have been delayed by more than a year.
Monzo was by far the worst offender, with 143,000 former customers affected – over 95 percent of total breaches highlighted by the CMA.
Under the 2017 rules, if the banks breach the Order again, the CMA can force them to comply, to undergo training, and/or to carry out annual compliance audits.
As yet, the CMA cannot impose financial penalties for breaches of this kind but has called for the power to do so.
Adam Land, the CMA’s Senior Director of Remedies Business and Financial Analysis, said,
“Nearly 150,000 people were affected by these banks’ breaches, with the majority being former Monzo customers. This may have made things harder for people trying to borrow money or apply for a mortgage.
“The CMA’s work in the sector is making it easier for people to get a better deal from their bank. Banks must comply with all the rules – and that includes providing a full transaction history promptly.
“We will be watching closely to make sure these leading names stick to their word and don’t let their customers down again.
“The Bank of Ireland, Monzo, Natwest Group, and Virgin Money should be in no doubt that the CMA stands ready to take further action if these failures are repeated.”