![]() ![]() The banks have proactively contacted all the customers they believe are due for compensation however, any customer who has not been contacted and think they may have been affected should contact their bank. The banks have estimated that approximately 526,000 customers will have received redress payments totalling £300 million.īy November 2019 the banks had already made payments of approximately £259.9 million to customers. In July 2017, the banks implemented a group-wide customer redress scheme which included refunding all broken payment arrangement fees, arrears management fees and interest accrued on the fees and the refund of litigation fees if applied unfairly or, in some circumstances, automatically. Otherwise, the FCA would have imposed a financial penalty of £91,495,400. The banks’ agreement to accept the FCA’s findings meant they qualified for a 30% discount. The banks did not dispute the FCA’s findings and exercised their right, under the FCA’s partly contested case process, to ask the FCA’s Regulatory Decisions Committee to assess the appropriate level of sanction. However, a further review by the FCA in July 2015 found that the banks had failed to make sufficient progress in addressing the problems and the banks were required to undertake a Skilled Person’s review. During 20 the banks took a number of further steps to address the concerns raised by the FCA and on several occasions informed the FCA they were on track to implement those improvements. Failings were then identified as part of a thematic review conducted by the FCA in 2013. Some of the failings were identified by the banks as early as 2011 but the steps the banks took failed fully to rectify the issues. The FCA therefore found that the banks breached Principle 3 and Principle 6 of the FCA’s Principles for Businesses between 7 April 2011 and 21 December 2015. These risks were exacerbated when, as part of a simplification programme, the banks lost a large number of personnel with mortgage collections and recoveries expertise, after which point nearly all of their mortgage arrears call handlers were new-to-role. However, in practice, the system created a risk of inflexibility in approach, with the result that call handlers may have failed to negotiate appropriate payment arrangements for customers. The banks also employed a system that set a minimum percentage of a customer’s contractual monthly payment which a call handler was authorised to accept as a payment arrangement without obtaining further authority from a more senior colleague. 'Firms should take notice of the action we have taken today to ensure that their own treatment of customers meets our expectations.'īetween April 2011 and December 2015 the banks’ systems and procedures for gathering information from mortgage customers in payment difficulties or arrears resulted in the banks’ call handlers not consistently obtaining adequate information to assess customers’ circumstances and affordability, creating a risk that customers were treated unfairly. 'Customers should still pay what is owed, but banks are obliged to treat their customers fairly when making new payment arrangements. In some cases, customers were treated unfairly, including vulnerable customers. By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. ![]() 'Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations. Less than 10 percent are on standard variable rates and about 40 percent are on tracker or discounted variable rates, not all linked to base rates.Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA said: Lloyds TSB, in the middle of buying rival HBOS, is among those to sign up to the scheme and the UK government could end up owning as much as 43.5 percent of the combined group if it makes full use of the 13 billion pounds of state money on offer.Ībout half of Britain’s 11.7 million mortgages are on fixed rates, the CML estimated. ![]() Britain’s Council of Mortgage Lenders warned before the Bank of England decision that lenders would struggle to pass on any rate cut because of the ongoing freeze in lending between banks which has driven up the cost of bank funding.ĭespite those difficulties British lenders have faced a barrage of media criticism for raising their rates on some mortgage products, particularly given that one of the conditions attached to a multi-billion pound state bailout of the banks required participants to maintain the availability of lending. ![]()
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