Hundreds of Former Virgin One Mortgage Borrowers to Get Refunds

Hundreds of former holders of mortgages from Virgin One will receive refunds—some of them totalling thousands of pounds—after an investigation found they received confusing information about their loan, which may have prompted them to remortgage or even sell their house.

At issue is a repayment plan guide for Virgin One’s bundled mortgage and current account packages. The plan showed customers how much should be left in the current account each month in order for the mortgage to be paid off at the end of the term.

Between 2012 and 2014 the lender contacted some customers to tell them they were behind on the repayment plan. The information could have been misinterpreted as a request for immediate payment, prompting some borrowers to take unintended actions that cost them money, including remortgaging or even selling the property.

The problem was discovered during an internal review, following customer complaints, by Royal Bank of Scotland (RBS), which now owns the accounts. It’s writing to affected customers to offer them refunds for losses resulting from the confusion.

Some customers may be entitled to refunds of thousands of pounds.

An RBS spokesperson said: "As a responsible lender we contacted customers to make sure they had plans in place to pay down their mortgage when it came to the end of the term. We offered help and advice with payment plans and prepared our customers for reaching the end of their mortgage term.

"We understand this communication could have been misinterpreted as a request for immediate payment and are therefore proactively contacting customers and offering compensation where appropriate.”

One former Virgin One customer is receiving compensation of more than £7,000 after communication from the lender misled her into thinking she was behind on the mortgage and she sold the home. Donna, who didn’t want to give her last name, has been offered money to compensate her for costs associated with the sale of the property, plus interest.

Donna told Money Saving Expert: "We found the monthly statements with Virgin One contradicted themselves and were quite confusing. It would often tell you that if you carried paying into the account at the rate you were doing so, you would be left with an outstanding amount on your mortgage on closure but then on another page it would state that you had XXX amount of money to borrow.

"It soon became clear that it was too flexible and once the yearly statement came in with the forecast and the threat we could lose our home, we decided to remortgage with another provider and opt for a straight forward repayment mortgage. We sold in 2014.”

RBS will be contacting all customers it believes were affected by this issue.