Lloyds Banking Group has agreed to review 600,000 Halifax mortgage contracts in a move which could eventually see £500 million paid out to mortgage customers.
The bank revealed it has reached a voluntary agreement with the Financial Services Authority to initiate a customer review and contact programme with regard to outstanding concerns with some of its retail mortgage contracts.
In a statement, Lloyds said the review specifically relates to Halifax customers who were sent a mortgage offer between 20 September 2004 and 16 September 2007 and who still held that mortgage in January 2009.
The bank said that the wording which summarises the Halifax SVR cap in the mortgage offer document sent during this time had the potential to cause confusion.
As a result, Halifax is to write to approximately 600,000 customers from April to ensure these customers are fully aware of what the SVR cap is and how it relates to their own borrowing.
Through the programme, goodwill payments are expected to be made to approximately 300,000 customers.
A £500 million provision has been made by the bank within its 2010 accounts in relation to the programme which it expects to fully cover the payments.
"The group is committed to running its business with the highest levels of integrity and treating its customers fairly and therefore believes that a proactive co-ordinated programme to identify affected customers and make goodwill payments is the appropriate course of action," concluded the statement.
Borrowers who think they might have one of the affected mortgages have been told they do not need to take any action, as Halifax will proactively contact all the relevant customers.
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