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 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
- 5 UK weather: 'Coldest night of the year' tonight as freezing temperatures plummet to -10C
President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
AirAsia flight QZ8501 missing: Search for plane carrying 162 passengers from Indonesia to Singapore suspended overnight
Millions of Britons struggling to feed themselves and facing malnourishment
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...