Santander U.K. to Contact 270,000 Borrowers Over Rate IncreaseLindsay Fortado
Banco Santander SA’s U.K. division agreed to contact more than 270,000 mortgage customers to clarify information it gave them before increasing the cap on its standard variable rate for home loans in 2008. Some may be entitled to redress.
When Santander raised the upper limit on the rate, the bank sent customers letters that were unclear about what was happening and how it would affect them, the U.K. Financial Conduct Authority said in a statement today. Some of the borrowers didn’t even receive a letter, the markets regulator said.
“While a large number of people will be contacted” from next week explaining what went wrong and giving them a chance to complain if they think they lost money, “it is likely that only a minority of borrowers will be entitled to redress,” the regulator said. “Whether borrowers have lost out financially will depend on the circumstances of their case.”
Banks in the U.K. have been targeted by regulators over a series of customer service lapses in recent years, including improper sales of loan insurance and some derivatives products. The sales of the loan insurance, known as PPI, topped the list of complaints, followed by checking accounts, general insurance products, credit cards and savings accounts.
Some Santander customers who had an SVR-linked mortgage with an early repayment charge at the time of the cap increase may not have known that they could have repaid the loan without the extra fee for the next three months, the bank said in a statement today.
“The majority of our mortgage customers would not have suffered any detriment as a result of any lack of clarity in the original communication in December 2008,” the bank said.