LLOYDS Banking Group is set to pay back almost £300 million after agreeing to set up a redress scheme for mortgage customers who incurred fees after they fell behind with their mortgage payments.
Following engagement with the Financial Conduct Authority (FCA), the bank acknowledged that when customers fell into arrears, they did not always do enough to understand customers’ circumstances to be confident that their arrears payment plans were affordable and sustainable.
As a result, Lloyds has committed to refund all fees charged to customers for arrears management and broken payment arrangements from January 1, 2009 to January 2016.
For those mortgage customers who entered its litigation process during this period, this will include any litigation fees that were applied unfairly.
Lloyds will also offer payments for potential distress and inconvenience, and consequential loss which customers may have experienced as a result of not being able to keep up with unsustainable repayment plans.
It estimates that around 590,000 customers will receive redress payments, totalling about £283 million.
The bank will write to all affected customers to explain the refund.
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