Santander UK is writing to more than a quarter of a million of its mortgage borrowers, saying they could be due compensation because it failed to make it clear the terms on which it changed the cap on its standard variable rate in December 2008.
This meant some Abbey customers who could have closed or changed their mortgages without triggering an early redemption charge missed their chance.
Santander is writing to 270,000 customer but reckons only 30,000 will be due compensation, which could range from £20 to more than £1000. It said that it had already taken a charge against last year’s profits for the likely cost of contacting borrowers and paying compensation. It could take up to six months for all customers to be contacted.
Santander last year made provisions of £232 million for compensation for retail customers and the mis-selling of interest rate swaps to companies. It previously put aside £751 million for mis-selling payment protection insurance.