FOS upholds some complaints on banks’ mortgage payment errors

The Financial Ombudsman Service has found in favour of some cus-tomers affected by an error by Yorkshire and Clydesdale banks that meant thousands of customers underpaid on their mortgages.

In August the banks apologised to 18,000 clients after it miscalculated their monthly payments, creating a shortfall on their mortgage.

A spokesman for Clydesdale Bank says: “The majority of custo-mers have accepted this was a gen-uine error and are being asked to pay back the amount they had originally agreed when taking out their mortgage.

“A small number referred their complaint to the Ombudsman, which reviewed cases on their own merits. In some cases it has found in the customer’s favour.”

A spokeswoman for FOS could not comment on individual cases but says where the lender is entirely to blame the amount will be written off and the customer will only pay the higher rate from the day the error was made public.

But if the lender is not entirely to blame – such as if the borrower knew the payment was too low but kept quiet – then the shortfall must be paid back to the banks.

Ray Boulger, senior technical director at John Charcol, says lenders miscalculating mortgage payments is rare but FOS has done the right thing by ruling in favour of some affected customers.

He says: “It is reasonable to expect lenders to be competent enough to calculate mortgage payments. The banks handled this badly.
“They could have held up their hands and written off the money that was underpaid but they didn’t.”

In August FOS reported a surge in complaints following the error.

The banks wrote to all affected variable rate borrowers in July to suggest a payment plan for the shortfall as some were paying less than the minimum and not on course to pay off their mortgage in the agreed time frame.