Customer contact and remediation programme

What are arrears fees?

Arrears fees cover the cost to us for a proportion of the additional work we did for customers in arrears e.g. when we dealt with your mortgage account if it was in arrears and tried to make contact with you.

Why were the fees inappropriately charged?

If you struggle to make mortgage payments and fall behind, a payment plan can be agreed to help support you. This includes a thorough affordability assessment to check that the new payments are set at an appropriate level.

We identified that some of our policies relating to affordability assessments were not always consistently applied. As a result, we are reimbursing mortgage arrears fees to around 590,000 customers who had fallen behind on their mortgage payments, some of whom may have been inappropriately charged.

What changes have you made to ensure this doesn’t happen again?

We have taken significant steps to address this situation and prevent it happening again, including ensuring consistency of in-depth affordability assessments, colleague training, strengthening the way we run the business and reviewing fee charging.

Will you pay interest on this refund?

Yes, in addition to the refund, we will pay interest where applicable.

When can customers due a refund expect to get their money back?

We have already started writing to impacted customers. We expect to have refunded the vast majority by the end of the year.

How will I know if I am eligible for a refund?

If you are eligible for a refund we will send you a letter advising the amount of the refund, how this will be paid and the contact details of the specialist team that deals with these fee refunds. You do not need to take any action.

How will the refunded fees be paid?

Current customers will receive this payment by way of a credit to their mortgage account. Customers who no longer have a mortgage with us will receive a cheque. Customers with outstanding mortgage balances will have the refund applied to reduce the amount outstanding.

Will you pay for inconvenience and additional costs?

If you are due a refund you may be able to claim for additional costs and any distress or inconvenience as a result of having these fees charged. For example, this may include a charge made by your current account provider for non-payment of a direct debit, or where you had to call us multiple times to discuss these fees being applied to your account. We will send you a letter explaining how to claim.

Which mortgages are included?

Residential and Buy to Let

How have you calculated how much to return to me?

We are returning all relevant fees and, where applicable, we will add interest. We will send you a letter advising the amount of the refund, how this will be paid and the contact details of the specialist team that deals with these fee refunds.

Why can’t I have my money now and why can’t you tell me if I will get a refund?

We are currently reviewing accounts that have had mortgage arrears fees charged, and will refund fees to the majority of impacted customers this year.

Why did you charge these fees?

The arrears fees reflected a proportion of the additional work we did for customers in arrears and the cost to us, e.g. when we tried to make contact with you.

Will I still pay these fees in the future?

If your arrears reach the point where we need to take legal action then fees related to this specific activity will still apply e.g. instructing a solicitor.

Does this impact me if I have or am going through litigation or repossession?

We are returning all relevant arrears fees and interest on those fees where applicable, including to customers who have been or are currently going through legal action or repossession. We are currently reviewing litigation fees in this contact programme in agreement with the Financial Conduct Authority.

Will I be eligible for a refund even if my mortgage is paid off?

Yes.

The mortgage account holder during that period is deceased. What happens now?

We will contact the executors of the estate to refund any relevant fees.

Has this affected my credit rating?

No. Your credit rating reflects the position of your mortgage at the time your account was in arrears. The application of the mortgage arrears fees did not change this position.

Could my house have been repossessed wrongly because of these fees?

We have no evidence that any property was wrongly repossessed as a result of these fees.

I have moved house and no longer have a mortgage with you?

We will work with tracing companies to establish your current address and will contact you irrespective of whether or not you have moved house.

Will you deduct tax from the fee refund?

Yes, but only from the interest. It is a legal requirement for us to deduct tax at the basic rate.

If you are a non-taxpayer it may be possible to reclaim all or some of the tax deducted from HM Revenue & Customs (HMRC). If you pay tax at a rate which is higher than the basic rate, this interest should be declared to HMRC, with any additional tax due being agreed with your tax office.

If you are eligible for a refund we will send you a letter confirming the refund and the tax deduction. You should keep this as it can serve as evidence of the tax deduction and as this interest and tax won't be included in any tax certificate you may receive about any other saving you may have with us.