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
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
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

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee