Last week, HSBC and Santander agreed, following CMA action, to refund customers after they both broke a legal order relating to unarranged overdrafts. Part 6 of the CMA’s Retail Banking Market Investigation Order means banks must send customers text alerts if they’ve exceeded their arranged overdraft limit, with banks unable to charge customers unless this text has been sent.

This clash with the CMA proves we live in a time when the consumer is king. Gone are the days when a bank might swiftly block customers’ cards and send out a letter outlining the heavy sanctions they’ll face for dipping into their overdraft. Now, in the age of customer power, banks have many more responsibilities before any penalties can be placed on the customer. This a fine lesson to all banks that they must lay the groundwork for excellent customer communication, and full compliance and traceability, to ensure they never fall foul of regulations. Specifically, this means a firm focus on internal processes to ensure accountability, and ensuring all customer data is accessible across the organisation so it can be put to use at crucial times.

To truly succeed, banks need to make certain that they aren’t just alerting customers to meet regulations, but proactively warning and advising them. Texting about an overdraft limit is one thing, but banks can provide a much better experience – and secure better customer loyalty – by, for instance, proactively offering advice about how to reduce spending, or sharing information about more cost-efficient borrowing options.

If there’s one thing this breach reveals, it’s that customers’ expectations around communication are changing. Simple compliance isn’t enough; without a truly excellent experience, customers will take their business elsewhere.