A PYMNTS Company

UK: CMA takes a swing at small business loan, account bundling

By  |  October 22, 2014

The UK’s Competition and Markets Authority has decided that HSBC Holdings violated competition laws by forcing borrowers to open an account before they were loaned any money, say reports.

The CMA ruled that both HSBC and First Trunk Bank, owned by Allied Irish Banks, violated competition rules by requiring that small- and medium-sized enterprises open accounts before they were given a loan. Reports say the CMA has sent a letter to the banks outlining directions on how they must comply with rules regarding SMEs.

The practice of bundling a business loan with a bank account was banned in 2002, according to reports, for both of these banks and six others.

The CMA’s letter is part of the regulator’s broader investigation into small-business lending and checking accounts. Preliminary findings showed a lack of competition in the industry, reports say; just four banks control more than 75 percent of the market.

Full content: Bloomberg

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.