Financial Conduct Authority hand out hefty fine to Yorkshire Building Society for mortgage misconduct
Yorkshire Building Society has been dished out a £4.1 million by the industry regular the Financial Conduct Authority (FCA), after it was found that the lender had failed to correctly handle clients who had fallen into arrears with their mortgage repayments.
The fine represents the largest ever fine handed out to a building society, overtaking the previous record of £1.43 million ñ also handed out to Yorkshire in June for failing to make sure their promotional content was transparent with prospective borrowers.
The north-based building society had already agreed to pay back £8.4 million to 34,000 of their customers after it found itself in hot water with the FCA in February over the findings of the watchdogís external probe.
However, the fine is a double-blow to the burgeoning lender, who will have reason to feel aggrieved that they have been ordered to pay both compensation and a fine for an offence that many in the financial industry have been guilty of over the past decade.
Yorkshire ìcompletely changedî
The fine relates to the mishandling of Yorkshire Building Society clients between the dates 1st October 2011 and 31st Jly 2012.
In particular, the FCA found that Yorkshire were guilty of taking far too long to get into contact with customers who had fallen into arrears with their mortgage payments ñ an actuality that had been caused by their failure to train their members of staff sufficiently and the loose provision of ìfragmentedî guidance to new workers when they begun employment in one of their branches.
The FCA concluded that this operational malpractice had meant that those struggling with their finances had not received the degree of care that they should have from Yorkshire, instead being subjected to a multitude of late fees and interest charges that could have been avoided had they been afforded the attention expected of one of the countryís major lenders.
"By allowing cases to drift without agreement, YBS's actions meant that customers in vulnerable circumstances risked falling into further financial difficulty," said Tracey McDermott, FCA director of Enforcement and Financial Crime.
"Customers in financial difficulty need to be treated fairly and sensitively," she said.
To their credit, Yorkshire have taken full responsibility for their actions, acknowledging their failings in a statement and highlighting that the incident had ìcompletely changedî the manner in which their business operates.
They also promised to re-compensate any of their customers who had paid late charges on their mortgage since 2009, including any interest that had been incurred on top of these fees.
"As a mutual organisation owned by our members, the service we give to customers is fundamental to us and we are very sorry for letting them down," said Chris Pilling, Yorkshire Building Society chief executive.
"I hope the refunds we have voluntarily given to customers and the changes we have made demonstrate how seriously we have taken this issue and our commitment to put things right," he said.
Yorkshire will now refund an average of £247 to 33,900 of their clients ñ a great victory for the consumer world, and another illustration of the excellent job the FCA is doing cleaning up the act of the financial industry since its ascension to the role of watchdog.
Tracey McDermott, the FCAís director of enforcement and financial crime, said: ìBy allowing cases to drift without agreement, [Yorkshireís] actions meant that customers in vulnerable circumstances risked falling into further financial difficulty.
ìCustomers in financial difficulty need to be treated fairly and sensitively. Firms must ensure that they are taking into account the particular circumstances affecting customers who find themselves in difficulty.î
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