Northern Rock compensation payments after admin error

Some 152,000 former customers of defunct bank Northern Rock are to receive an average of £1,775 in compensation following a paperwork error.

Northern Rock Asset Management, the state-owned remnant of Northern Rock plc, will pay out £270m in refunded interest after the bank failed to make mandatory disclosures in customer letters since 2008.

UK Asset Resolution, NRAM's holding company, will contact potentially affected customers in writing with further information in the next few days.

The refund is likely to increase public sector net borrowing for 2012/2013, Treasury economic secretary Sajid Javid said in a statement to Parliament.