Clydesdale Bank has been fined £8.9 million for failing to treat its mortgage customers fairly.
The Financial conduct Authority (FCA) issued the fine after customers were not informed clearly their rights following the bank's miscalculation of repayments on over 42,500 mortgages.
In April 2009, Clydesdale discovered an error in its repayment calculation method for customers with variable rate mortgages. This resulted in 42,500 being incorrectly repaid, and 22,000 accounts were left with shortfalls and faced unexpected increases in monthly repayments.
The error was corrected in 2010, leaving a £21.2m shortfall in the bank's mortgages and account shortfalls averaging £970 - ranging from under £20 to over £18,000.
Tracey McDermott, the FCA’s director of enforcement and financial crime said of the fine:
For most people mortgage payments are their biggest monthly outgoing and we all budget on the assumption that the information our mortgage lender gives us about what we need to pay is correct.
Here Clydesdale failed in that basic duty and, when it discovered the problem, sought to pass all of the consequences on to its customers - expecting them to find the money to remedy mistakes which were entirely of Clydesdale's making.
Firms must put the interests of customers at the heart of their business if we are to restore trust and confidence in financial services. Clydesdale is today paying the price for its decision to put its bottom line ahead of the need to ensure its customers were treated fairly.