Around 34,000 mortgage borrowers are to share £8.4 million in compensation after the Yorkshire Building Society admitted wrongly charging customers who had fallen behind with repayments. The Bradford-based lender, which also lends under brands Accord Mortgages, Barnsley Building Society and Chelsea Building Society, is to hand out around £247 on average to each borrower who paid fees for missing repayments since January 2009 - even those who were not overcharged.
The payout comes after City watchdog the Financial Conduct Authority (FCA) questioned the Yorkshire Building Society's procedures for charging customers in arrears. Lenders are allowed to levy fees on a mortgage account when it falls into arrears by two months or more, but the Yorkshire was found to have been wrongly applying the charges for some customers in arrears when it conducted a review in light of the FCA's concerns.
The mutual said the "fairest approach" was to refund all arrears administration fees since January 2009, with interest on top. The Yorkshire - the UK's second biggest building society behind Nationwide - will start sending out letters to customers past and present on February 25 explaining the compensation process, with the accounts of existing customers impacted credited on the same day.
The payment will appear as a credit on their next mortgage account statement. Most former customers who no longer have a mortgage with Yorkshire or one of its subsidiaries will receive a cheque, or if there is still a balance outstanding, the refund will be used to reduce the amount owed.