Monzo has been reprimanded by the UK’s Competition and Markets Authority (CMA) for falling to specify the monthly charge in the correct document when users agreed to overdrafts.
The CMA claimed that a breach between October 2018 and November 2021 meant that the app’s customers were not aware of the potential monthly fees, which can reach £15.15 a month.
An internal audit “failed to identify” that its “fee information document” did not comply with competition rules, the watchdog said.
It however did not formally enforce Monzo to take action as the fintech giant, which counts Chinese tech company Tencent amongst its backers, updated its charges document in November last year.
“This is a legacy issue we addressed last year. We have taken steps to make sure it does not happen again,” Monzo announced in a statement.
The digital bank has been no stranger to regulatory wrist-slaps and probes after the CMA found Monzo to break competition rules again last year by failing to send more than 143,400 customers their transaction history when they shut personal current accounts.
The Financial Conduct Authority (FCA) has also investigated the fintech startup over its compliance with money laundering rules between October 2018 and April 2021.
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Monzo was hit by the pandemic as card spending grounded to a halt.
The firm was started in 2015, with the hope of shaking up the financial market by not opening any branches and instead offering its users a digital service.
It has over 5 million customers and was last year valued at £3.3 billion after its latest funding round.
Analysts believe that Monzo could go public within the next few years.
This week, the company announced it was offering its employees paid, three-month sabbaticals as it looks at revamping the work-life balance for its employees.
The move follows the company’s founder Tom Blomfield reeling back from the company in 2021 as a result of anxiety and stresses of running a business during the pandemic.