Nearly half a million personal loan and credit card customers are in line for a windfall after a raft of lenders agreed to repay over £149m in interest and charges following paperwork errors.
The Office of Fair Trading (OFT) said 17 banks and building societies would compensate around 497,000 customers after admitting documentation relating to store cards, credit cards, loans and hire purchase agreements failed to comply with the Consumer Credit Act (CCA).
Under the rules, lenders are not entitled to interest or arrears fees during the period that their statements do not comply with the Act. It follows similar errors made by Barclays, Northern Rock and The Co-operative Bank, with more than £370m already forked out in redress.
The latest round of compensation comes after the OFT wrote to 50 banks and building societies last November in light of the issues flagged up by Barclays, Northern Rock and the Co-op.
Some of the breaches date back as far as 2008 when new CCA rules came into effect, with lenders failing to provide the required wording or information in statements and arrears notices.
In some cases, they did not provide annual statements within 30 days of it being due, or had failed to inform customers of the amount they were in arrears within 14 days of default.
The 17 lenders – who have not been named – will now contact those affected directly.
David Fisher, senior director for consumer credit at the OFT, said: “These issues were not deliberate misconduct, but the institutions concerned should have ensured they were complying with the law.”