An epidemic of errors in credit and loan agreements is the latest costly scandal to hit the banking sector, with the total bill already approaching the pounds 1bn mark.
Other financial institutions that have uncovered similar errors include
Here we look at who is entitled to cash and what you have to do to get it.
What's this all about? It concerns some personal loans, plus some credit and store cards and hire purchase agreements. It has nothing to do with the payment protection insurance mis-selling debacle.
It originally had all the hallmarks of an isolated and relatively minor glitch affecting just one bank: Northern Rock. But many of
The total bill for all this stands at pounds 850m, and is expected to rise.
What did they do (or not do)? In some cases, statements didn't include the original amount borrowed. Under the act, they have to contain the sum borrowed, plus the opening and closing balance. Other statements failed to include the necessary reminders about people's rights when it comes to paying off the loan.
It might sound like a technicality, but under the law borrowers aren't liable for interest or default charges relating to a period when a lender hasn't provided all the necessary information, even if the original documentation was fully above board. Affected customers are entitled to a refund of the interest or fees charged over the period that the errors occurred - which, in some cases, is several years.
How did this come to light? In
Which other banks are involved? In
Then, in March this year, the
What's happening with
It has not disclosed how many loans are affected, nor the period over which errors occurred. However, customers who have applied for an
How do I know if I'm affected? You'll have either received a letter, or you'll be getting one. It is understood
Can I have the loan written off? For years, claims companies have promoted the idea you can have your loan written off on the grounds of paperwork errors, but it's dubious as to how much this is true. The current refunds are, crucially, not about suggesting that the loans are unenforceable - rather that for a period of time, the interest on the loans was unenforceable. Also, in each case, the banks have been proactive so it makes no sense to use a claims company.
How is this money being repaid? Some people have received their refund in the form of a reduction in what they owe. In the case of Northern Rock, many customers had their loan account balance reduced. Similarly,
It is thought that some people who had already paid off their loan or no longer had the card, have received a cheque.
Has anyone lost money? It's not clear. In the case of Northern Rock, it was said that no one had lost out financially and no one had complained.
Has there been mis-selling? The banks insist this is not a mis-selling issue; instead, they say, these are technical breaches, and that the original sales were all appropriate.
There's a new cloud on the horizon for HSBC Photograph:
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