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| Santander mortgage customers to share million-pound compensation pot | Santander mortgage customers to share million-pound compensation pot |
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| Up to 30,000 Santander mortgage customers are set to share millions of pounds in compensation after it emerged they may have lost out because of confusing letters sent by the bank more than four years ago. | Up to 30,000 Santander mortgage customers are set to share millions of pounds in compensation after it emerged they may have lost out because of confusing letters sent by the bank more than four years ago. |
| The Spanish-owned institution is the latest to pay the price for a paperwork error. In December 2012 it emerged that the taxpayer would be picking up a £270m bill because Northern Rock had made mistakes on personal loan statements, and in October 2012 Bank of Scotland was fined £4.2m following blunders relating to some of Halifax's mortgage offer documents. | The Spanish-owned institution is the latest to pay the price for a paperwork error. In December 2012 it emerged that the taxpayer would be picking up a £270m bill because Northern Rock had made mistakes on personal loan statements, and in October 2012 Bank of Scotland was fined £4.2m following blunders relating to some of Halifax's mortgage offer documents. |
| In Santander's case, the letters were sent out by its Abbey brand in December 2008 at a time when the Bank of England base rate was being repeatedly cut, and told customers about changes being made to their mortgage rate. The letters may have left some borrowers unaware that they could have moved to a better deal offered by another lender. | In Santander's case, the letters were sent out by its Abbey brand in December 2008 at a time when the Bank of England base rate was being repeatedly cut, and told customers about changes being made to their mortgage rate. The letters may have left some borrowers unaware that they could have moved to a better deal offered by another lender. |
| They explained that the bank was increasing its "cap margin", which puts a ceiling on the rate it can charge above the Bank of England base rate when setting its standard variable rate (SVR). At the time, Abbey changed the cap margin from 2.5% to 3.75%. | They explained that the bank was increasing its "cap margin", which puts a ceiling on the rate it can charge above the Bank of England base rate when setting its standard variable rate (SVR). At the time, Abbey changed the cap margin from 2.5% to 3.75%. |
| The Financial Conduct Authority (FCA), the successor to the Financial Services Authority, said that when Santander raised the cap it should have given borrowers clear information in easy to understand terms. "But the letters it sent were not clear, so borrowers may not have understood what was going to happen, how this was going to affect them, and the options open to them. Some borrowers did not receive a letter at all," it added. | The Financial Conduct Authority (FCA), the successor to the Financial Services Authority, said that when Santander raised the cap it should have given borrowers clear information in easy to understand terms. "But the letters it sent were not clear, so borrowers may not have understood what was going to happen, how this was going to affect them, and the options open to them. Some borrowers did not receive a letter at all," it added. |
| As a result, some customers tied into an SVR-linked mortgage by early repayment penalties may not have been aware they could have paid off their mortgage penalty-free for three months after the increase took effect. | As a result, some customers tied into an SVR-linked mortgage by early repayment penalties may not have been aware they could have paid off their mortgage penalty-free for three months after the increase took effect. |
| Between now and the autumn, Santander will write to more than 270,000 customers who had a mortgage with an SVR cap at the time, though the FCA said it was likely that only a minority of borrowers who could potentially have switched to a better deal would be entitled to compensation. | Between now and the autumn, Santander will write to more than 270,000 customers who had a mortgage with an SVR cap at the time, though the FCA said it was likely that only a minority of borrowers who could potentially have switched to a better deal would be entitled to compensation. |
| Santander has estimated that up to 30,000 people on certain fixed or tracker deals – those that had an extended SVR "lock-in" – may have lost out, though it said these would have to be assessed on a case-by-case basis as it would depend on how much they had borrowed and the best-buy rates available at the time. | Santander has estimated that up to 30,000 people on certain fixed or tracker deals – those that had an extended SVR "lock-in" – may have lost out, though it said these would have to be assessed on a case-by-case basis as it would depend on how much they had borrowed and the best-buy rates available at the time. |
| The compensation will run into millions of pounds, but the bank said it was not possible to be any more specific at this point. In September 2012 Santander made a £232m provision to cover future payments relating to mis-selling and other "customer conduct issues", and it is understood the redress will come out of this provision. | The compensation will run into millions of pounds, but the bank said it was not possible to be any more specific at this point. In September 2012 Santander made a £232m provision to cover future payments relating to mis-selling and other "customer conduct issues", and it is understood the redress will come out of this provision. |
| "If a customer contacts Santander we will record and review their case on an individual basis," the bank said, which has put information online at santander-products.co.uk/capmargin | "If a customer contacts Santander we will record and review their case on an individual basis," the bank said, which has put information online at santander-products.co.uk/capmargin |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| Yorkshire BS | |
| Nationwide | Nationwide |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |