Lloyds Bank and Bank of Scotland fined by FCA – could you be entitled to a refund?

Today the Financial Conduct Authority (FCA) has fined Lloyds Bank, Bank of Scotland and The Mortgage Business £64,046,800 for failing from 2011 to 2015 to effectively handle mortgage customers in payment difficulties or arrears.

The fine was due to the FCA finding that between April 2011 and December 2015, the banks’ systems and procedures for gathering information from mortgage customers in payment difficulties or arrears resulted in the banks’ call handlers not consistently obtaining adequate information to assess customers’ circumstances and affordability, creating a risk that customers were treated unfairly.

Mark Steward, executive director of enforcement and market oversight at the FCA said: “Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations. By not sufficiently understanding their customers’ circumstances, the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. In some cases, customers were treated unfairly, including vulnerable customers.

“Customers should still pay what is owed, but banks are obliged to treat their customers fairly when making new payment arrangements.

“Firms should take notice of the action we have taken today to ensure that their own treatment of customers meets our expectations.”

In July 2017, Lloyds Bank, Bank of Scotland and The Mortgage Business implemented a group-wide customer redress scheme, which included refunding all broken payment arrangement fees, arrears management fees and interest accrued on the fees and the refund of litigation fees if applied unfairly or automatically.

The banks estimate that about 526,000 customers will have received redress payments totalling £300m.

The banks have contacted all the customers they believe are due for compensation, but, any customer who has not been contacted and thinks they may have been affected should contact their bank.