Clydesdale Bank fined £8.9m by City regulator for mortgage errors

 

Clydesdale Bank has been fined £8.9 million by the City regulator after it forced 22,000 customers into higher mortgage repayments in order to rectify a previous error by bank staff.

The Financial Conduct Authority (FCA) said Clydesdale had failed to clearly spell out customers' rights following the bank's miscalculation on the repayments on more than 42,500 mortgages.

In total, the earlier blunder meant a £21.2 million shortfall in Clydesdale mortgages, with customers who underpaid left with outstanding mortgage balances higher than they should have been. The shortfalls range from less than £20 to more than £18,000, with an average of £970.

Clydesdale, which is owned by National Australia Bank, sent letters to customers in 2009 which suggested that they had no alternative but to bring their repayments up to date.

But many customers could have rejected demands to repay the shortfalls caused by Clydesdale's calculation errors.

Clydesdale has agreed to compensate those who were adversely affected, resulting in a total cost to the bank of about £42 million.

Customers who were left with shortfalls will automatically be compensated and the bank is writing to all customers who were affected by the blunder. Mortgage-holders do not have to do anything until they are contacted by Clydesdale to explain what the next steps are.

David Thorburn, chief executive of Clydesdale, said he was "very sorry" that the situation had not been handled properly.

He said: "We should have made it clear at the time that this was entirely our fault and that some customers may be entitled to compensation.

"Our priority is to fix this for customers as quickly as possible and they will each receive a letter explaining how we will make this right for them."

Some 14,000 customers will see an "immediate resolution", including a full apology and a refund within the next 48 hours, he said.

The vast majority of other customers with more complicated cases should hear from the bank in the next couple of weeks.

Some customers may also be entitled to compensation for extra charges they have had to incur as a result of the original mistake, such as bank charges.

Consumers can still take their case to the financial ombudsman, which resolves disputes between consumers and financial institutions, if they are unhappy.

The bank's "lack of clarity" was made worse by poor instructions given to call handlers for dealing with customers who called to complain, the FCA said.

The regulator said the fine would have been higher had it not been for Clydesdale's redress scheme, and the bank received a 30% discount for settling at an early stage.

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
tv
Sport
footballShirt then goes on sale on Gumtree
Voices
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
art
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine