Clydesdale Bank Plc must pay about 42 million pounds ($67 million) in fines and compensation to customers for miscalculating mortgage repayments.
Clydesdale, a Glasgow, Scotland-based lender owned by National Australia Bank Ltd., made a calculation error that left a 21.2 million-pound shortfall across 22,000 customer mortgage accounts, the U.K. Financial Conduct Authority said in a statement today. The error, which began in 2005 and was corrected in 2010, led to unexpected increases for customers in their monthly repayments.
“For most people, mortgage payments are their biggest monthly outgoing and we all budget on the assumption that the information our mortgage lender gives us about what we need to pay is correct,” said Tracey McDermott, the FCA’s head of enforcement. “Here Clydesdale failed in that basic duty and, when it discovered the problem sought to pass all of the consequences on to its customers.”
Clydesdale was fined 8.9 million pounds by the regulator after receiving its standard 30 percent discount for cooperating. The total cost for the bank, including the penalty, will be about 42 million pounds, Clydesdale said in an e-mailed statement. Most of that had been provided for by the end of June, it said.
David Thorburn, Clydesdale’s chief executive officer, apologized for the errors.
“We should have made it clear at the time that this was entirely our fault and that some customers may be entitled to compensation,” Thorburn said.