UK Asset Resolution, the holding company established in 2010 to bring together Government-owned Bradford & Bingley and Northern Rock Asset Management, has identified loans issued by NRAM where the documentation is not compliant with Consumer Credit Act requirements.
The errors were associated with the top up loans used to create Northern Rock’s 125 per cent Together mortgages.
The period of non-compliance originated from changes to the CCA in 2008, prior to the separation of NRAM and Northern Rock.
In a written ministerial statement issued yesterday, Treasury economic secretary Sajid Javid said: “In selected letters and customer account statements, certain paragraphs of mandatory wording were written incorrectly and compulsory information about the amount of credit was not included in the statements.
“The CCA provides that a lender is restricted in how it can enforce a debt and borrowers are not liable for interest, over the period during which the lender has not provided the specified information.
“UKAR has undertaken an internal investigation and has consulted with legal counsel, the Financial Services Authority, the Office of Fair Trading, UK Financial Investments and the Treasury. Following this, the UKAR Board has recommended making proactive restitution to affected NRAM customers in receipt of non-compliant statements and default notices relating to CCA- regulated loans.
“Based on discussions with UKFI, the Treasury has no objections to UKAR’s proposed approach and UKAR will issue the corrected documentation and take steps to remediate interest and other charges to affected customers.
“Where redress is required, this will be made by correcting a customer’s account balance to reverse the consequences of them being charged any interest over the period in which the documentation is non-compliant.”