NAB’s UK subsidiary, Clydsdale Bank, has been slammed by the country’s ASIC equivalent, the UK Financial Conduct Authority (FCA) for failing to inform its customers of their rights after the lender miscalculated the repayments on more than 42,000 mortgages.
According to UK newspaper, The Telegraph,’ tens of thousands’ of Clydesdale Bank mortgage customers will receive up to £18,000 (A$30,860) in compensation for errors made by the lender.
As a result of the errors, around 22,000 people steadily paying off a home loan face a shortfall at the end of the typical 25-year mortgage term, ranging from £20 to more than £18,000.
The Financial Conduct Authority issued a damning criticism earlier this week of the way Clydesdale handled the problem and fined the bank £8.9m (A$16.97m) for ‘failing to treat customers fairly’ and ordered it to pay compensation and write to those affected.
While the calculation error was originally discovered back in 2009, was only corrected in 2010 and the damaging implications were simply ‘passed on’ to customers.
In response to botching its calculations, Clydesdale reportedly tried to increase monthly repayments made by borrowers. The FCA said all 22,000 customers faced ‘unexpected increases’ in monthly bills both to correct the error and to make up for their shortfalls.
“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, director of enforcement and financial crime at the FCA.
“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.”
This is simply the latest in a steam of issues NAB has had to deal with regarding what it dubbed ‘conduct and redress’ issues at Clydesdale.
In an unrelated action supervised by the FCA, more than 20,000 Clydesdale customers can expect compensation AXA Wealth Services over the miss-selling of investment products through the lender.