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Tuesday, December 11, 2012

Northern Rock Customers To Receive Windfall

In the spirit of a game of Monopoly, where a "bank error in your favour" has occurred, some of Northern Rock's customers are to receive an unexpected windfall.

Reuters reports that Northern Rock Asset Management, the state-owned remnant of defunct lender Northern Rock plc, is refunding £270M of interest payments to approximately 152,000 customers.

For why?

Northern Rock failed for some reason to make mandatory disclosures in loan documentation and customer letters in 2008. The mistakes pre-date the separation of Northern Rock plc and Northern Rock Asset Management.

There is of course a downside, the refund according to Treasury Economic Secretary Sajid Javid is "likely to increase public sector net borrowing for 2012/2013".


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