Release Date: 28th October 2014
To access the original FCA document, click here.
Summary
Yorkshire Building Society (YBS) has been fined £4,135,600 by the Financial Conduct Authority (FCA) for inadequacies in handling customers experiencing mortgage arrears. The fine addresses failings identified during the period from October 2011 to July 2012, where YBS was found to be slow in dealing with customers facing payment difficulties, leading to inappropriate handling and extended delays in resolving these issues.
The FCA’s investigation revealed that YBS’s call handlers lacked sufficient training and were guided by fragmented instructions, which resulted in inconsistent assessments of customers’ circumstances and an inability to identify the root causes of their financial difficulties. This led to significant delays in reaching long-term payment solutions, accruing additional fees and interest for the customers, ultimately exacerbating their financial strain.
YBS has acknowledged these shortcomings and has begun to refund all mortgage arrears fees with associated interest charged to affected customers since January 2009. This proactive measure, initiated prior to the enforcement investigation, encompasses about 33,900 customers who will collectively receive approximately £8.4 million in refunds.
Furthermore, YBS was prompted by the FCA’s concerns, raised in previous communications and a Skilled Person review in May 2013, which found unfair treatment in a substantial number of customer cases reviewed. In response, YBS also ceased charging mortgage arrears fees until the identified issues were fully addressed.
The early settlement by YBS qualified the building society for a 30% discount on the potential fine.
Key Takeaways for Other Firms:
- Proactive Customer Engagement: Address customer issues swiftly and sensitively, especially those in financial difficulty, to prevent exacerbating their problems.
- Adequate Staff Training: Ensure that all personnel dealing with financial difficulties are well-trained and operate under comprehensive and clear guidelines.
- Robust Management Systems: Implement effective management and monitoring systems to quickly identify and rectify poor customer treatment.
- Transparent and Fair Practices: Maintain transparency and fairness in all dealings, particularly in fee charging and handling of arrears and financial distress.
- Early Problem Identification: Develop mechanisms to detect and address issues before they escalate into regulatory concerns or impact consumer trust and financial wellbeing.
These practices will help other firms avoid regulatory penalties and enhance their customer relations, particularly in managing sensitive issues such as mortgage arrears.
