Digital bank Monzo failed to provide 13,000 departing customers with their transaction histories, making it more difficult for them to apply for mortgages and loans in the future, the competition watchdog has found.
The Competition and Markets Authority (CMA) says that between May 2021 and March 2022, the neobank was in breach of the Retail Banking Market Investigation Order 2017.
The Order requires banks to send transaction histories to all personal current account and business account customers within forty days of their accounts being closed. 95% of these transaction histories should be provided within ten working days.
Lenders often request these financial transaction histories as part of applications for mortgages and other loans. Not having access to their Monzo histories could therefore make it more difficult for ex-customers to qualify for credit.
The rules are in place to ensure that customers aren’t discouraged from switching accounts by concerns about their financial records and that those who do move aren’t penalised.
This is the second time Monzo has failed to meet the requirements. Between March 2020 and May 2021, a total of 143,437 former Monzo customers didn’t receive transaction histories when they closed their accounts through the app, the CMA found. The watchdog refrained from regulatory action at the time because it believed Monzo had taken steps to address to issue.
However, a further 13,000 customers were impacted over the next year, prompting the CMA to intervene again. It has now issued the digital bank with legally-binding directions to ensure this doesn’t happen again and to review its procedures with an independent body. The directions are enforceable in court.
Adam Land, senior director at the CMA, said: “It’s simply not good enough for a major bank like Monzo to repeatedly fail its customers by not following clear rules.
"Having a record of your financial transactions can act as important evidence needed to secure a loan or mortgage—so Monzo’s failure to provide these put an unnecessary obstacle in the way of thousands of customers.
We have ordered the bank to make changes which means customers should not face this issue in the future. We’ll be watching to make sure proper procedure is followed.”
Monzo said it has already introduced new auto-alerts to notify staff when the system fails to issue transaction histories to customers. It is also keeping a close watch to ensure these customers do receive the statements.
The bank has now contacted all affected customers to provide them with a copy of their transaction histories.
A spokesperson for Monzo said: “Unfortunately, due to a processing error, some customers were not proactively issued with historic transaction data, however this information was always available to these customers at their request.
“As soon as we were aware of this issue, we fixed it on the same day and contacted all impacted customers as soon as possible. We apologise for any inconvenience caused.”
Monzo was also chided by the regulator in February for failing to make customers aware of the full cost of dipping into their overdrafts.
But wrist slaps by the CMA haven't slowed the startup's growth. Its latest financial results, published in July, reveal that it has 5.8 million customers.
The startup's latest financial results reveal that it has 5.8 million customers.
