Mortgage Payments

21/07/2010

Clydesdale and Yorkshire Banks are nearing completion of a mailing to approximately 18,000 variable rate mortgage customers apologising for an error in how their monthly payments were calculated, resulting in an underpayment occurring.

The Banks are very sorry that this error has happened and for the inconvenience that this may have caused. The calculation has been corrected and the Banks have written to affected customers to apologise and suggest ways to return their accounts to the position they would have been in had this not occurred. The Banks are now focused on working with each customer to remedy the situation in the most appropriate way for their individual circumstances.

This calculating error, exacerbated by last year’s unprecedented falls in interest rates, led to the bank collecting less than the contractual minimum monthly payment required for customers to pay their mortgage within their agreed term. This means that the affected customers have been underpaying and now have a shortfall on their mortgage account.

The new regular payments, suggested to customers in their individual letter, reflect the correct monthly payment, plus an amount to eliminate any shortfall caused by the previous underpayments. For around half of the customers who have been underpaying, the total suggested increase is less than £25 a month (of which around £2 is to cover the shortfall). If the suggested payment is not suitable for the customer the Banks are providing other flexible options, with each customer's case being reviewed individually so that their full circumstances can be assessed and the most appropriate solution found.

The vast majority of Clydesdale and Yorkshire Bank mortgage customers are not affected by this issue and customers need take no action. Of those affected, 99 percent have already received their letter advising them of this. The remaining 1 percent (around 180 customers) will receive their letter in the next couple of weeks apologising and providing options to bring their account back on track.

Steve Reid, retail director for Clydesdale and Yorkshire Banks said: "First and foremost we are very sorry that this error has happened and for any inconvenience it may have caused those customers affected.

“We would like to reassure mortgage customers that they need take no action unless they have received a letter from us. The vast majority of our customers are not affected and, of those that are, 99 percent have already received their letter advising them of the specific impact on their account. The other 1 percent will hear from us in the next couple of weeks advising them of options to bring their account back on track."

What has happened?

We recently carried out a review of our mortgages that revealed some variable rate mortgage customers' regular payments have fallen below the minimum required to complete the mortgage within the agreed term. If you have not received a letter, it is likely that you are not affected, so unless you hear from us you need take no action.

Why has this happened?

We applied some changes to our mortgage systems to add more features for customers. Unfortunately, this created an error in the way that some regular mortgage payments were calculated. This calculation error, when combined with last year's unprecedented rapid reduction in interest rates, resulted in some customers' regular payments falling below the minimum required to complete the mortgage within the agreed term.

What are you doing about it?

We have now corrected the calculation and have already written to 99% of affected customers to apologise and advise them of their options to restore their mortgage account to the correct level. The remaining one percent will hear from us in the next couple of weeks. Our priority is to be fair to all customers and to resolve the matter as quickly and as smoothly as possible ensuring they are able to repay their mortgage within its remaining term.

Which customers are impacted?

The vast majority of our customers are not affected. Only some of our customers with certain variable rate mortgages, on which interest is calculated daily, are affected.

I have received a letter and wish to discuss my options - what should I do?

Contact the Customer Care Team on 0800 232 1322. The team is available from 8am to 8pm Monday to Friday.

This dedicated team will be able to discuss your individual circumstances and ensure the matter is resolved as quickly and as smoothly as possible. Unless you receive a letter from us, you need take no action.

I haven't received a letter but am still concerned about my mortgage account - what should I do?

The vast majority of our customers are not affected, only customers on certain variable rate mortgage products are have been affected. To ensure we're able to offer these customers the best possible support for their individual circumstances, we are writing to all of them individually to advise them of their situation. We have already notified 99% of those customers affected and the remaining one percent will hear from us in the next couple of weeks, advising of the options to bring their account back on track.

Each letter details the impact on their individual account and what action, if any, they are required to take. The letter will include full contact details for the dedicated Customer Care Team, who will be able to discuss individual circumstances and resolve the situation as quickly and as smoothly as possible.

If you have not received a letter, it is likely that you are not affected, so unless you hear from us you need take no action. However, if you still have concerns about your mortgage and believe you may be affected, please contact our Direct Banking team on 0800 121 4207.

I've received a letter and wish to complain - what should I do?

Contact the Customer Care Team on 0800 232 1322 as per the instructions above. The team will be able to discuss your individual circumstances and support you in finding the best solution for your particular circumstances. If the team is still unable to resolve the matter for you, they will be to advise you of the process to follow.