A blunder in the wording of loan statements by the nationalised part of Northern Rock will cost the British taxpayer £270 million as customers are refunded an average of £1,775 for the error.
Up to 152,000 customers stand to receive the windfall – largely through lower borrowing costs on existing loans – which will increase the government’s debt this year.
The problems took place at Northern Rock Asset Management (NRAM), the part of Northern Rock that remains nationalised.
Loan statements sent to customers failed to include the original amount that had been borrowed.
The oversight was uncovered by the new state-owned body, UK Asset Resolution (UKAR), which now owns NRAM and the nationalised mortgages of Bradford Bingley.
The treasury, which is picking up the bill for the long-standing error, said letters sent to customers were not compliant with wording set out in the Consumer Credit Act, which requires such letters to contain three amounts: the original sum borrowed, the opening balance and the closing balance.
The letters did not include the first number.
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