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Yorkshire Building Society to refund £8.4m to customers

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17/02/2014
Yorkshire Building Society is to pay £8.4m compensation to about 34,000 current and former customers after the Financial Conduct Authority (FCA) raised concerns about incorrect charges.

The lender will refund all administration fees for mortgage arrears since January 2009, with customers expected to receive an average refund of £247 each.

The regulator said some customers may have been charged incorrectly as a consequence of Yorkshire Building Societies’ procedures not being robust enough.

Clive Adamson, director of supervision, said: “The FCA has worked closely with Yorkshire Building Society to get to the heart of this issue and ensure that customers are refunded what they are owed.

“We have been encouraged that they are now putting customers first by paying redress to everybody in arrears, not just those who were overcharged.

“But this is nonetheless a very important reminder that firms must take responsibility for any wrongdoing and make sure their customers get a fair deal.”

Yorkshire Building Society (YBS) has agreed to publish the details of the redress package on its website, making it the first organisation to take this step on a voluntary basis.

The FCA raised concerns with YBS, which includes Yorkshire, Chelsea and Barnsley building societies, and Accord Mortgages, about their processes for dealing with mortgage customers who had fallen behind in their payments.

Firms can only charge an administration fee when a mortgage account falls into arrears by two months or more to cover any administrative costs. YBS found that some of its customers in arrears may have been charged fees incorrectly.

To ensure people do not face lengthy delays and uncertainty in getting redress, YBS has agreed to refund all arrears administration fees charged since January 2009, plus interest on those fees. This means that borrowers who were charged correctly will also receive a refund.

The refund process including letters to customers with details of the exercise will commence on 25 February, and redress will start to be paid from this date.

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