Bank of Scotland apologises for ‘erroneous’ arrears letters

Bank of Scotland has apologised for sending out letters this month to some 200 mortgage customers in Ireland incorrectly informing them that their accounts were in arrears and there homes were "at risk" by not keeping up their payments.

The gaffe occurred when the bank, which quit the Irish market in 2010, wrote directly to its mortgage customers to explain the implications for their loans of the European Central Bank’s decision in mid-March to cut its main interest rate to zero from 0.05 per cent.

In about 200 cases it told customers they were “currently in arrears” with their loans when in fact they were fully up to date with payments. “The terms and conditions of your mortgage account permit the bank to seek repayment of these amounts immediately,” a letter from the UK bank dated April 22nd warned.

Higher payments

The customers were also told their “new monthly payment may be higher”, based on the way it calculated outstanding balances. They were informed the bank was operating in accordance with the Central Bank’s code of conduct on mortgage arrears, and suggested that customers might want to contact the Mabs budgeting service for advice.

Some of these customers contacted The Irish Times to express disquiet about being issued with these letters.

Small number

In response, a Bank of Scotland Ireland spokesman said: “Earlier this month, we sent a letter to all our mortgage customers informing them about the recent reduction in the ECB interest rate. We are aware that a small number of customers received a letter erroneously stating that they were in arrears.

“We would like to apologise for this and can confirm that we are writing out to impacted customers to clarify the position.” He said the letters would be issued to the customers in the “next few weeks”.

It is understood that Bank of Scotland still has about 30,000 mortgage accounts in Ireland.

It had operated in the Irish retail market under the Halifax brand, but the branch network was closed in the aftermath of the global financial crash in late 2008, as part of which the bank becoming part of the Lloyds Banking Group.

A helpline number in the letter connected customers to Australian asset-servicing group Pepper, which took over the management of Bank of Scotland's Irish mortgage book in the past week.