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Bank of Scotland fined over inaccurate mortgage records

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by Jan Harris
Bank of Scotland fined over inaccurate mortgage records

The Bank of Scotland has received a £2.4 million fine from the Financial Services Authority (FSA), for failing to keep accurate records on the mortgage payments of 250,000 customers of the Halifax between 2004 and 2011.

An investigation by the FSA, following a spate of customer complaints, discovered that 160,000 homeowners were incorrectly excluded from a compensation programme.

Errors occurred because the bank kept mortgage records on two separate computer systems, without ensuring they were always synchronised.

In 2008 the Bank of Scotland, which was then part of the HBOS group, informed some Halifax customers that it was increasing the standard variable rate (SVR) cap on their mortgages from 2 per cent above the Bank Rate to 3 per cent above it.

This was carried out in two stages in early 2009, by leaving the SVRs stable while bank rate fell.

It was later discovered that the original mortgage offer documents sent by the bank to some customers had been unclear about the extent to which capped SVRs applied, or could be changed.

In 2011, after discussions with the FSA, the bank tried to rectify its mistakes by making goodwill payments to the mortgage borrowers who had been misled.

However it left out 250,000 borrowers from the rectification programme by mistake, because their mortgage details were incorrectly recorded.

160,000 of these customers were initially not paid the goodwill payments owed to them, which were worth £162m, while 23,000 customers received payments totalling £20m when they should not have received them.

According to the FSA, some customers may never have received their goodwill payments had they not complained.

In other banking news, some HSBC websites worldwide were unavailable on Thursday night after a denial of service attack.

The HSBC UK and First Direct websites were both unavailable for some time.

HSBC has issued a statement reassuring customers that sensitive account data was not exposed by the attack.

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News posted: October 19, 2012

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