It’s always the same. It’s the poor what gets the blame and are charged far more than they should be. At the end of September Wonga managed to charge customers twice leaving thousands without money to buy food or pay their rent over a weekend. But that accident was resolved in days.
When it comes to overcharging it is the establishment lenders that know how to double charge their poorest customers over many years and take their time to put their customers back.
Poorest customers will be repaid
The Financial Conduct Authority estimates that up to 750,000 mortgage customers, who had got into mortgage arrears, could have been affected and is asking the lenders to work out the compensation by June next year.
Lenders overcharged those struggling with their mortgage payments by adding the arrears to the mortgage and also adding extra payments for the arrears as well. The problem came to light two years ago when a court ruled that Royal Bank of Scotland had wrongly charged customers in arrears twice.
Since then other banks and building societies representing 66% of mortgage lending have examined their own processes and agreed that they are likely to have overcharged 750,000 customers. But the FCA is not planning to impose any penalties on the lenders, or at least not yet. If the lenders take their time in identifying those affected, contacting them and paying them back they may face penalties.
Regulators warned six years ago
The FCA told lenders six years ago that automatic capitalisation should not be allowed if it caused borrowers to pay more.
Judging by the number of bank customers who were refused Payment Protection Insurance compensation when they first asked the big banks and who only got the money when they took their claims to the Financial Ombudsman’s office.
Struggling customers pay most
And, of course, it is quite likely that the customers struggling to pay were on the lenders’ most expensive standard variable mortgage rate because the lenders would deem that they could not move to cheaper fixed rate loans because they could not afford them. Across all markets – mortgages, energy tariffs, insurance and credit cards the best deals go to the better off.