03:33
Tieng Anh Vui
Clydesdale and Yorkshire Bank has been fined £8.9m for failing to treat customers fairly when trying to fix a miscalculation of mortgage payments.
The Financial Conduct Authority (FCA) said it failed to make customers fully aware of their rights after errors were made in 42,500 accounts.
The error was discovered in 2009 and corrected the following year.
But the FCA said that Clydesdale's response was too concerned with its own commercial interests.
Higher repayments
The calculation errors on customers' mortgage repayment demands occurred over a four-year period.
As a result, 22,000 customers had underpaid on their mortgages. They were subsequently expected to increase their monthly repayments to cover for the shortfalls and correct the error.
However, the FCA said that it was unfair that the cost was shifted to the customers, rather than being taken on by the bank.
"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, of 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.
"Clydesdale is today paying the price for its decision to put its bottom line ahead of the need to ensure its customers were treated fairly."
The bank has apologised and said that cost of the fine and compensation would total £42m.
"I am very sorry that this was not handled as it should have been. We should have made it clear at the time that this was entirely our fault and that some customers may be entitled to compensation," said David Thorburn, chief executive of Clydesdale and Yorkshire Bank, which is owned by National Australia Bank.
"Our priority is to fix this for customers as quickly as possible and they will each receive a letter explaining how we will make this right for them."
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