The watchdog said this action restricts competition and limits choice because customers may want to hold an account with one provider while using a different bank for their loan.

The business accounts come with a monthly fee, however, the charges are not applied for the first year so new customers would not yet have lost money. Lloyds said the requirement helped customers to access funding quickly.

The CMA said that 30,000 customers who had been running their businesses using personal accounts were told by the lender and its Bank of Scotland arm, that they must open a business account to access the Bounce Back Loan Scheme.

In response, Lloyds has agreed to a number of actions to become compliant with certain aspects of legal undertakings designed to protect banking customers from such anti-competitive practices.

Lloyds has agreed to write to customers throughout this month to inform them that if they opened a business current account (BCA) they are not required to maintain this account for the purposes of a loan under the Bounce Back Loan Scheme and can choose to switch to another provider at any time while keeping the loan. Lloyds customers will also be offered the option to switch to a fee-free loan servicing account.

Adam Land, CMA senior director of remedies business and financial analysis, said: “The Bounce Back Loans Scheme is a key part of the support provided by government to small businesses during the coronavirus pandemic. It is important that signatories to our undertakings participating in this Scheme do not restrict the choices of small businesses by bundling loans and business current accounts.

“By forcing businesses to open current accounts as a pre-condition to access this scheme, Lloyds breached the CMA undertakings it signed, reduced choice and put their customers at risk of being unnecessarily charged.

“Following our action, Lloyds is taking the steps necessary to become compliant and will shortly be contacting existing customers to inform them of their rights.”