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Northern Rock forced to pay £270m after admin gaffe

by Daniel Grote on Dec 12, 2012 at 08:04

Northern Rock forced to pay £270m after admin gaffe

State-owned lender Northern Rock is being forced to repay £270 million to customers due to an administrative error committed in 2008, according to reports.

The bank will hand an average payment of £1,800 to more than 150,000 customers, after failing to comply with disclosure rules on credit balances.

Economic secretary to the Treasury Sajid Javid said that customers had not been overcharged, but that refunds were due because 'certain paragraphs of mandatory wording were written incorrectly and compulsory information about the amount of credit was not included in the statement'.

The customers affected are almost all those who took out 'Together' unsecured credit alongside mortgages, which allowed them to borrow as much as 125% the value of their properties.

4 comments so far. Why not have your say?

Nick

Dec 12, 2012 at 08:51

Words fail me!!!

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David Craik

Dec 12, 2012 at 09:06

If Northern Rock has to pay £270m where there was no customer detriment, why does Capita not pay £110m more where clearly their customers have losses!

I'm with Nick.

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David Curley Dip extrodinaire

Dec 12, 2012 at 09:06

Nick, No words failed NR clients and NR. I suspect the drafters of the relevant clauses are now working in the civil service drafting our next set of crap laws and regulation

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Usually found sitting on the fence

Dec 12, 2012 at 10:11

Surely this is a good thing?

Put aside the fact it is Govt money, for a second, and consider that had the banks taken this approach or similar over PPI, then there would be no "No Win, No Pay" PPI claims companies hounding all and sundry every day (text, phone, email and post). If the banks had said fair cop, made a mistake and reviewed all their cases and paid out for genuine misselling, then the overall cost to the banking industry would and could have been much lower. For NR to do this, it prevents them going through the costly legal process, through years of legal fees and the setting up of spurious claims companies etc etc

Is it frustrating? Yes! Is it the right approach and to be encouraged? I think so!! And perhaps in the future there will be fewer mistakes...

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