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Clydesdale fined £8.9m for calculation blunder
by Michelle McGagh on Sep 26, 2013 at 11:00
Clydesdale Bank has been fined £8.9 million after trying to force thousands of customers to pay mortgage shortfalls of up to £18,000 after it mis-calculated their monthly payments.
The Financial Conduct Authority (FCA) found the bank had mis-calculated the monthly payments of over 42,500 variable rate mortgages, meaning that when customers reached the end of their agreed terms they were left with significant shortfalls.
Around 22,000 accounts were left with shortfalls ranging from under £20 to £18,000 with an average of £970. These shortfalls left a £21.2 million blackhole in Clydesdale’s books.
Clydesdale discovered the error in April 2009 and corrected it in 2010, meaning customers suffered increased mortgage repayments. After discovering the error Clydesdale set up a call centre to deal with customers but the regulator said ‘in seeking repayment from customers as a priority, it wrongly sought to balance its own commercial interests against the requirement to treat customers fairly’.
Letters sent to customers suggested that they had no alternative but to pay what they owed on their mortgage accounts. Those that called Clydesdale to complain and refuse to pay the shortfall were given ‘poor instruction’ by the call handlers, which compounded the lack of clarity given by Clydesdale.
Tracey McDermott, FCA director of enforcement and financial crime, said: ‘For most people mortgage payments are their biggest monthly outgoing and we all budge on the assumption that the information our mortgage lender gives us about what we need to pay is correct.
‘Here Clydesdale failed in that basic duty and, when it discovered the problem, sought to pass all of the consequences on to its customers –expecting them to find the money to remedy mistakes which were entirely of Clydesdale’s making.’
She added that the bank ‘is today paying the price for its decision to put its bottom line ahead’ of its customers.
Clydesdale will be forced to contact all customers who were left with shortfalls and compensate them. Mortgage-holders do not need to contact Clydesdale but more information can be found on its website: www.cbonline.co.uk
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