Bank must pay for its own error

THERE is never a good time for a bank to make a mass miscalculation which leaves thousands of mortgage-holders in arrears. But when the country is struggling to recover from a recession, when household finances are under constant stress and when this is a situation brought about directly by the profligacy of banks themselves, Yorkshire and Clydesdale Bank's error has come at the worst possible moment.

There is not a mortgage-holder in the country who will fail to identify with the shock and outrage experienced by the 18,000 customers who have

been told they are now effectively behind on their mortgages, about

half of whom now face soaring increases in their repayments of up to 300 a month.

Nor will there be much disagreement with the view that, as this mistake is entirely down to the bank, it is up to the bank, rather than its customers, to make up the deficit. After all, when mortgage-holders go into arrears as a result of their own laxity, banks are only too quick to ensure that they pay the penalty in full.

This incident is yet another indication of the way in which banks fail to realise the extent to which the terrain they operate on has changed

in the past two years. In the same way that they continue to pay

outrageous bonuses, banks seem only dimly aware that the entire financial system of this country has been rescued by public funds and that the taxpayer, and therefore the customer, is owed a huge debt of honour.

Yorkshire and Clydesdale will rightly point out that, unlike other banks, it has not taken a penny of public money. But that is hardly the point. Had the Government not stepped in when it did to stop banks failing, it is likely that the contagion would have spread across the entire industry.

The banks owe their continued existence to public generosity. And it is high time they showed the same spirit in return.