Santander UK is today starting to send out letters to over 270,000 borrowers inviting them to complain about action the bank took five years ago.
Santander has agreed the deal with the regulator the FCA. Letters that the bank originally sent out in 2008 failed to make it clear when it would raise the cap on its Standard Variable Rate, and some borrowers did not receive any letters. The FCA says that customers may not have understood the implications of the rise, and what their options were.
The FCA says only a minority of borrowers will be entitled to redress, and this will depend on whether borrowers could have moved to a better mortgage rate.
Santander said in a satement: “Some customers who had an SVR-linked mortgage with an early repayment charge with Santander at the time we increased the cap margin may not have been aware that they could have repaid their mortgage ERC-free for three months after the increase affected their mortgage.
“Following receipt of our letter, if a customer contacts Santander we will record and review their case on an individual basis and, depending on the customer’s personal circumstances at the time the cap margin affected their mortgage, consider appropriate next steps.
“The majority of our mortgage customers would not have suffered any detriment as a result of any lack of clarity in the original communication in December 2008.”
It is thought that up to 30,000 mortgage borrowers could receive compensation. The letters will be sent out in batches by Santander between now and the autumn.