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| Version 0 | Version 1 |
|---|---|
| Northern Rock will repay £270m to loan customers | Northern Rock will repay £270m to loan customers |
| (35 minutes later) | |
| Some 152,000 Northern Rock Asset Management customers will receive hundreds of pounds each in compensation owing to mistakes made in paperwork. | Some 152,000 Northern Rock Asset Management customers will receive hundreds of pounds each in compensation owing to mistakes made in paperwork. |
| Customers who took out personal loans of less than £25,000 will receive an average of £1,170 each. | Customers who took out personal loans of less than £25,000 will receive an average of £1,170 each. |
| Bank staff failed to include key details on annual statements about loans, including the original amount which had been borrowed. | Bank staff failed to include key details on annual statements about loans, including the original amount which had been borrowed. |
| Refunds of the interest paid by customers will now be made. | Refunds of the interest paid by customers will now be made. |
| 'Right thing' | |
| Many of the loans were provided on top of Northern Rock's Together mortgage which was popular before the credit crunch, and allowed homebuyers to borrow more than their homes were worth. | Many of the loans were provided on top of Northern Rock's Together mortgage which was popular before the credit crunch, and allowed homebuyers to borrow more than their homes were worth. |
| The £270m bill for the refunds will have to come from the taxpayer, as this section of the bank has been owned by the government since 2008. | The £270m bill for the refunds will have to come from the taxpayer, as this section of the bank has been owned by the government since 2008. |
| The problems with the paperwork arose as a result of an investigation by UK Asset Resolution (UKAR), which looks after rescued banks for the government. | |
| "Northern Rock Asset Management is acting in accordance with its legal responsibilities and we are determined to do the right thing for customers and the taxpayer," said UKAR chief executive, Richard Banks. | |
| "We will be writing to all customers who are affected and advising them on next steps. We have not received any complaints or claims as a result of this matter and as far as we are aware it has not resulted in financial loss for customers." | |
| Letters | |
| Affected customers would be refunded for all the interest they paid after the mistakes were made in 2008, economic secretary to the Treasury Sajid Javid confirmed in a written statement. | |
| Customers did not need to do anything at this stage. They will receive a letter in the next few days. | |
| "Where redress is required, this will be made by correcting a customer's account balance to reverse the consequences of them being charged any interest over the period in which the documentation is non-compliant," Mr Javid said in the statement, | |
| The mistakes pre-date the separation of Northern Rock plc and Northern Rock Asset Management. | |
| The bill would not delay the repayment of government funding, which stood at £19.6bn in June. The Treasury said it would fully recover the whole of the taxpayer support for the bank. |