£247 refund for 34,000 borrowers as Yorkshire pays for blunder on arrears

The Bradford-based lender, which also operates under brands including Accord Mortgages, Barnsley Building Society and Chelsea Building Society, is to hand out £247 on average to each borrower who paid fees for missing repayments since January 2009 – even those who weren’t overcharged.

The multi-million pound pay-out comes after City watchdog the Financial Conduct Authority (FCA) questioned Yorkshire Building Society’s procedures for charging customers who were in arrears.

The mutual said the “fairest approach” was to refund all arrears admin fees since January 2009, with interest on top.

Yorkshire Building Society – which is the UK’s second biggest building society behind Nationwide – will start sending out letters to customers past and present on February 25 explaining the compensation process, with the accounts of existing customers affected being credited on the same day. The payment will appear as a credit on the customers’ next mortgage account statement.

Most former customers who no longer have a mortgage with Yorkshire Building Society or one of its subsidiaries will receive a cheque, or if there is still a balance outstanding on their account, the refund will be used to reduce the amount owed.

In a statement issued yesterday, Yorkshire Building Society said: “Our customers are at the heart of everything we do, which is why we are taking proactive steps to reimburse those who may have been incorrectly charged arrears administration fees.

“To ensure customers do not face lengthy delays and uncertainty whilst we review all individual files, we have decided the fairest approach for our customers is to refund all arrears administration fees charged since January 2009, plus interest on those fees.”

A spokesman for the FCA said yesterday: “We have worked closely with Yorkshire Building Society to get to the heart of this issue.”

He said the FCA had been encouraged by the fact that the Yorkshire was “putting its customers first” by paying redress to all customers affected by arrears admin fees, and not just those who were overcharged.

[email protected]