Five questions answered on Clydesdale and Yorkshire Bank mortgage fines

How big were the shortfalls?

Clydesdale and Yorkshire Bank has been ordered to compensate mortgage customers it treated unfairly as well as pay a fine. We answer five questions on the fine.

Who has ordered Clydesdale and Yorkshire Bank to compensate customers?

The Financial Conduct Authority (FCA) has fined the bank £8.9m. The authority said customers were not made aware of their rights after errors in 42,500 accounts in 2009.

It added that Clydesdale was concerned with its own commercial interests rather than its customers.

Around 22,000 customers will now receive payouts averaging £970.

What happened exactly?

There was a calculation error on customers’ mortgage repayments demands over a four year period to 2009. Due to the error, 22,000 customers had underpaid their mortgages and were subsequently expected to increase their monthly repayment to make up for the short fall.

The FCA said this was unfair and the bank should have taken on the cost rather than shifting it to the customer.

How big were the shortfalls?

The underpayments ranged from £20 to over £18,000. They will now be paid back in compensation. Those with outstanding mortgages will see their debt reduced while others will receive a cheque.

A further 20,500 who paid too much of their mortgage may be able to claim compensation as well.

Overall the bank has said the cost of the fine and compensation would total £42m.

What has the FCA said?

"For most people mortgage payments are their biggest monthly outgoing and we all budget on the assumption that the information our mortgage lender gives us about what we need to pay is correct," said Tracey McDermott, of the FCA.

"Here Clydesdale failed in that basic duty and, when it discovered the problem, sought to pass all of the consequences on to its customers - expecting them to find the money to remedy mistakes which were entirely of Clydesdale's making.

"Clydesdale is today paying the price for its decision to put its bottom line ahead of the need to ensure its customers were treated fairly."

What has Clydesdale said?

"I am very sorry that this was not handled as it should have been. We should have made it clear at the time that this was entirely our fault and that some customers may be entitled to compensation," said David Thorburn, chief executive of Clydesdale and Yorkshire Bank, which is owned by National Australia Bank.

"Our priority is to fix this for customers as quickly as possible and they will each receive a letter explaining how we will make this right for them."

Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

Getty
Show Hide image

The UK must reflect on its own role in stoking tension over North Korea

World powers should follow the conciliatory approach of South Korea, not its tempestuous neighbour. 

South Korea’s president Moon Jae-in has done something which took enormous bravery. As US and North Korean leaders rattle their respective nuclear sabres at one another, Jae-in called for negotiations and a peaceful resolution, rejecting the kind of nationalist and populist response preferred by Trump and Kim Jong-un.

In making this call, Jae-in has chosen the path of most resistance. It is always much easier to call for one party in a conflict to do X or Y than to sit round a table and thrash through the issues at hand. So far the British response has sided largely with the former approach: Theresa May has called on China to clean up the mess while the foreign secretary Boris Johnson has slammed North Korea as “reckless”.

China undoubtedly has a crucial role to play in any solution to the North and South Korean conflict, and addressing the mounting tensions between Pyongyang and Washington but China cannot do it alone. And whilst North Korea’s actions throughout this crisis have indeed been reckless and hugely provocative, the fact that the US has flown nuclear capable bombers close to the North Korean border must also be condemned. We should also acknowledge and reflect on the UK’s own role in stoking the fires of tension: last year the British government sent four Typhoon fighter jets to take part in joint military exercises in the East and South China seas with Japan. On the scale of provocation, that has to rate pretty highly too.

Without being prepared to roll up our sleeves and get involved in complex multilateral negotiations there will never be an end to these international crises. No longer can the US, Britain, France, and Russia attempt to play world police, carving up nations and creating deals behind closed doors as they please. That might have worked in the Cold War era but it’s anachronistic and ineffective now. Any 21st century foreign policy has to take account of all the actors and interests involved.

Our first priority must be to defuse tension. I urge PM May to pledge that she will not send British armed forces to the region, a move that will only inflame relations. We also need to see her use her influence to press both Trump and Jong-un to stop throwing insults at one another across the Pacific Ocean, heightening tensions on both sides.

For this to happen they will both need to see that serious action - as opposed to just words - is being taken by the international community to reach a peaceful solution. Britain can play a major role in achieving this. As a member of the UN Security Council, it can use its position to push for the recommencing of the six party nuclear disarmament talks involving North and South Korea, the US, China, Russia, and Japan. We must also show moral and practical leadership by signing up to and working to enforce the new UN ban on nuclear weapons, ratified on 7 July this year and voted for by 122 nations, and that has to involve putting our own house in order by committing to the decommissioning of Trident whilst making plans now for a post-Trident defence policy. It’s impossible to argue for world peace sat on top of a pile of nuclear weapons. And we need to talk to activists in North and South Korea and the US who are trying to find a peaceful solution to the current conflict and work with them to achieve that goal.

Just as those who lived through the second half of the 20th century grew accustomed to the threat of a nuclear war between the US and Russia, so those of us living in the 21st know that a nuclear strike from the US, North Korea, Iran, or Russia can never be ruled out. If we want to move away from these cyclical crises we have to think and act differently. President Jae-in’s leadership needs to be now be followed by others in the international community. Failure to do so will leave us trapped, subject to repeating crises that leave us vulnerable to all-out nuclear war: a future that is possible and frightening in equal measure.

Caroline Lucas is the MP for Brighton Pavilion.