Yorkshire Building Society has been hit with a fine of £4.1m by the Financial Conduct Authority for failings when dealing with its mortgage customers experiencing payment difficulties.
Between 1 October 2011 and 31 July 2012, call handlers at YBS dealing with customers in payment difficulties failed to identify promptly the cause of their problems and their future financial prospects, the FCA said in a final notice.
These failures led to significant delays in determining the most appropriate payment solutions, meaning that while the lender sought to avoid repossession, some customers incurred increased fees and associated interest.
YBS agreed voluntarily prior to the enforcement investigation to refund all mortgage arrears fees, plus interest charged to customers since January 2009. The redress scheme is currently underway and approximately 33,900 customers will be repaid a total of £8.4m.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said: “Firms must ensure that they are taking into account the particular circumstances affecting customers who find themselves in difficulty.
“By allowing cases to drift without agreement, YBS’s actions meant that customers in vulnerable circumstances risked falling into further financial difficulty.”
The investigation found insufficient training and fragmented guidance meant that call handlers did not consistently probe customers’ circumstances and identify the cause of their problems.
These issues were not spotted because weaknesses in checking procedures and management information and a failure to identify customer complaints meant that YBS management did not have sufficient information, the regulator found.
In September and October 2012, the FSA wrote to YBS highlighting serious failings in the monitoring and oversight of cases discovered during a previous visit.
The FCA ordered a skilled person review in May 2013 which found that in 64 out of 87 cases considered, customers were not treated fairly and in 52 of these cases customer detriment could be identified.
YBS agreed to settle at an early stage of the FCA investigation and therefore qualified for a 30 per cent discount.
This is the second fine in four months for Yorkshire, which was served a £1.4m penalty in June of this year over promotions relating to a structured product aimed at mainstream consumers that “let their customers down badly”.
peter.walker@ft.com
