A mistake made by Northern Rock while calculating their loan statements will cost taxpayers £270m. Customers of the company will be have returned to them an average of £1,170 for the mistake that provided them with false information.
152,000 clients of Northern Rock will receive surprising lower borrowing costs on their existing loads which will have a negative impact on the government’s debt. According to information released by the company, the problem took place at the Northern Rock Asset Management which is part of the nationalised part of the company. Currently, a major part of Northern Rock is owned by Sir Richard Branson’s Virgin Money which purchased it in 2011.
The mistake was found by the UK Asset Resolution which is currently in control of the Northern Rock Asset Management department. The issue was located in the regular loan statements which were sent to their clients. The letters did not include the amount of money which was borrowed initially, and this is one of the most important parts of this type of letters.
The Treasury will be the unit that will have to pay for this error. Their official statement said that the regular loan statements sent to clients didn’t contain the necessary information. The requirement of the CCA is that these letters contain the amount of money borrowed, and the opening and closing balance. However the letters sent out by the NRAM didn’t feature the first numbers.
Sajid Javid of the Treasury released a statement saying: “Some of the letters and loan statements sent to clients weren’t full and lacked certain paragraphs and mandatory information. If the required information isn’t present in the letters, then the lender can’t enforce the interest rates on the debts of the borrowers. Therefore, he can’t collect the money generated by interest for the period during which the borrower didn’t receive the required information.”