Bank error could cost borrowers thousands

Sister banks Yorkshire and Clydesdale have admitted to a systems error that has led to 18,000 of their mortgage borrowers being undercharged on their homeloans.

The bank has written to all but 180 of the customers affected so far, and requested that they make up the difference.

Two-thirds of those customers impacted live in Scotland, and all are on either tracker or variable-rate deals.

The error is thought to have arisen when the banks, owned by National Australia Bank, attempted to develop their own software for calculating payments.

The banks say that around half of the wrongly-charged borrowers have underpaid by £25. However, some customers have been informed that they are in arrears to the tune of up to £3,000.

Spokesperson Alison Puerte said:

“First and foremost we are very sorry that this error has happened, and for any inconvenience it may have caused to those customers affected.”

Borrowers are reported to be furious. Some have already lodged complaints with the Financial Ombudsman, and more are expected to take legal action going forward.

This is the first time a mortgage lender has admitted to such an error since 2001, when Halifax revealed that it had incorrectly charged 40,000 borrowers between 1979 and 1989.

That mistake arose due to a computer glitch at Leeds Permanent Building Society, which Halifax took over in 1995. The systems had failed to record any overpayments made or payment holidays taken by those customers during those 10 years.

Where customers had been overcharged interest, Halifax paid out compensation of up to £6,000 per customer, and the lender waived all underpayments completely.