Bank of Scotland fined £4.2m for mortgage errors

 
City A.M. Reporter
Bank of Scotland (BOS) has been fined £4.2m by the Financial Services Authority (FSA) for errors in its mortgage systems, which led to inaccurate mortgage records for 250,000 customers.

During 2004 and 2011, the FSA said BOS kept customer mortgage information in two unaligned accounts, meaning the bank was relying on inaccurate information for "considerable" periods of time.

The watchdog discovered the error when BOS customers complained that they had been wrongly excluded from having a cap on their standard variable mortgage rate, and had not received subsequent goodwill payments.

BOS then mistakenly contacted 33,700 customers about goodwill payments, which were intended for Halifax customers who previously received inaccurate changes to the standard variable rates of their mortgages.

Payments amounting to £20.4m were made to 22,700 of those customers.

Tracey McDermott, director of enforcement and financial crime at the FSA, said: “This breach is particularly serious because the inaccuracies built up over a period of seven years.

"There was no structure in place to identify errors as they occurred and no checking procedures thereafter.”