Clydesdale Bank fined £8.9m by City regulator for mortgage errors
Thursday 26 September 2013
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.
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 3 Ball pool for adults opens in London
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
Boris Johnson claims porn-obsessed Islamic jihadists are 'literally w*****s'
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Putin opponent reveals Russian President's daughter's secret identity
Ball pool for adults opens in London
Gay couple buy JebBushForPresident.com web domain, and refuse to sell
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...