The consumer watchdog, the Office of Fair Trading have ordered British Banks to tell the truth about any past errors that they were responsible for involving loan agreements. This order came about on 4th November this year as concerns starting to arise following a number of problems of a similar nature, coming out of the millions paid out in compensation by Barclays, Northern Rock and the Co-op.
Over 50 banks and building societies have now received a letter from the OFT because the three banks named above had admitted that some of the refunds they were having to make was because their documentation didn’t comply with the Consumer Credit Act. These refunds were linked to errors such as wrongly worded arrears notices, and borrowers in receipt of this are now entitled to refunds on interest paid over the period when the errors occurred.A rocky start to 2013
When murmurs about Northern Rock started again back in December last year with the Chancellor of the Exchequer speaking about a singular incident then warning bells started to ring. It was only a matter of time before other problems started to come out of the woodwork and now we may be set for another round of compensation and pay-outs. This is fine if you are on the receiving end of getting the money back, but the knock on effect to other consumers is that the banks and building societies will try to recoup their losses some other way.
I am perfectly happy to pay a charge to a bank or building society if I feel fully confident that they are doing the job they are being paid to do, and to be fair in the many years I have been banking my hard earned cash, I have not had a problem. I trusted as most of us do, that when we go ahead and take out a loan with a reputable financial organisation that we will be given the correct information under the relevant legislation.Financial institutions need to regain consumer confidence
The last slip-up with Northern Rock was to do with mainly unsecured personal loans of just under £25k and the taxpayer had to foot the bill because it happened when the company was in public ownership. It will be interesting to monitor the response the consumer watchdog receives over the next few weeks to see if any other establishment has got a potential refund situation on its hands. Then, can I suggest they invest in better staff training and auditing facilities in the future if they want to regain consumer confidence in their abilities to carry out their jobs.