Lloyds hit for forcing Bounce Back Loans borrowers to open accounts
Lloyds has been named and disgraced for forcing small businesses to open paid commercial checking accounts to access Bounce Back loans.
The competition watchdog said Lloyds, one of the biggest in the small business market, treated small businesses unfairly by forcing them to open an account to withdraw Bounce Back loans backed by the State.
The Competition and Markets Authority told 30,000 customers who operated their businesses with personal accounts at Lloyds and its subsidiary Bank of Scotland that they had to open a business account to access Bounce Back loans.
The program, which has taken out £ 35.5 billion in credit, offers lenders a 100% state guarantee on low-interest loans to qualifying small businesses. The big banks, rather than the government, must provide the working capital.
In 2002, Lloyds agreed not to require personal account customers to open a separate account if they wanted to borrow money from the bank – a practice known as “bundling”.
But when it comes to Bounce Back loans, Lloyds has asked existing customers who operate their businesses from personal accounts to also open paid commercial accounts.
Although the new business accounts were free in the first year, fees would have been applied thereafter.
The guard dog noted Lloyds had restricted the choice of customers and had “exposed their customers to the risk of being charged unnecessarily”.
Mike Cherry, national president of the Federation of Small Businesses, said The temperature: “No bank should force small business customers to open paid accounts to access government-sponsored emergency aid. Those who have been faced with this scenario should not face any charges later. “
Lloyds told the newspaper he had informed the watchdog of his approach and was writing to clients to “reiterate that they can transfer their account to a free loan service accountant.”