One major High Street personal and business bank account provider recently revealed it may need to mete out additional compensation to its mortgage customers due to a mix up with its interest rates.
Several months ago, banking giant Halifax singled out more than half a million of its customers, stating that they may be eligible to receive compensation due to a mortgage rate confusion concern. Around 300,000 of the lender’s customers turned out to be on the receiving end of these compensation payments, but now, the High Street banking provider has said there could be an additional 250,000 customers eligible for further compensation.
The compensation payouts, which could run as much as £4,500 for every affected customer based on a three year mortgage of £150,000, will either be a fixed payout or equal to 1 per cent of the interest of their mortgage for every year the borrower had the loan. Industry experts say that Halifax may end up paying through the nose, as there are thousands upon thousands of borrowers who could be eligible to receive a payout.
The confusion stems from Halifax raising its standard variable rate mortgages from 2.5 per cent to 3.5 per cent. The Financial Services Authority, the financial regulator for the UK, voiced concerns that documentation wording may have given borrowers the wrong idea that they would be notified in advance in the event of such a rate change, which led Halifax and the FSA to come to an agreement with Halifax subsequently came to an agreement over compensation payouts to those borrowers who had been impacted by the change.