Yorkshire Bank may face action

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A consumer group has urged the City watchdog to take action against the Yorkshire and Clydesdale banks if they continue to demand mortgage customers make up repayment shortfalls caused by a computer error.

Consumer Focus has written to the lenders, which are both part of National Australia Group, saying they should cover the cost of the mistake and not ask consumers to make up the difference between what they were charged and what they should have paid.

The group has also written to the Financial Services Authority calling on it to take enforcement action, unless the banks take steps to “do the right thing” by affected customers.

It emerged in July last year that 18,000 customers at the banks had underpaid their mortgages due to an internal error, with some people facing rises of up to £300 a month to make up the shortfall.

The consumer group, which estimates that a total of at least £10m needs to be made up, said the banks should take into account guidance issued by the Financial Ombudsman Service (FOS) over the issue, and not pursue customers for the extra money.

The FOS received 410 complaints about mortgages with the two banks during the second half of 2010 – a 600 per cent increase on the previous six months.

The ombudsman said 87 per cent of mortgage and home finance claims were upheld in favour of consumers.