The Yorkshire Building Society failed to help struggling borrowers when they came to it to discuss their financial problems, the City watchdog said yesterday.
It fined the Yorkshire £4.1m for the mistreatment, which led to higher fees and interest payments for some mortgage borrowers.
In 64 out of 87 cases considered, the regulator found failure.
The mutual is also refunding the fees and associated interest of customers who were in arrears since January 2009, paying £8.4m to a total of 33,900 borrowers.
“As a mutual organisation owned by our members, the service we give to customers is fundamental to us and we are very sorry for letting them down,” said Yorkshire’s chief executive Chris Pilling.
“I hope the refunds we have voluntarily given to customers and the changes we have made demonstrate how seriously we have taken this issue.”