The building society has set aside £2 million to pay back over 7,500 former mortgage customers that were charged too much interest.
West Bromwich Building Society is to refund more than 7,500 former mortgage borrowers, after it discovered it had charged them too much interest.
The affected borrowers were wrongly charged interest on their mortgage up until the end of the month in which they redeemed their loan, when in fact they should have only been charged interest up to the date of redemption.
The Financial Conduct Authority said it would not take any regulatory action to punish the Society for the blunder as it was taking measures to treat affected customers fairly and provide appropriate redress.
Who will recieve a refund?
Most of the 7,669 mortgages affected by the error were taken out directly through West Bromwich Building Society between 2004 and 2007.
However, a small number of miscalculations occurred prior to 2004 on mortgages acquired through the Society’s specialist lending division, West Bromwich Mortgage Company.
[SPOTLIGHT]Not all mortgages taken out between these dates are affected – just those with terms and conditions which state that interest will only be charged up until the date of redemption.
The Society says current mortgage borrowers won’t be impacted by the error as terms and conditions have since been updated to make clear interest will be charged until the end of the month of redemption and its systems had been improved to ensure interest is charged correctly where this is not the case.
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How much will they get?
The building society has set aside £2 million to refund customers impacted by the miscalculation.
Affected borrowers will be fully reimbursed the interest they were overcharged, plus 8% interest on top which applies from when the mortgage was redeemed up until 30th June 2014.
The value of refunds will vary depending on the mortgage balance when a borrower redeemed their loan and how close it was to the end of the month. But a spokesperson said most would receive between £100 and £500 back.
What to do to get your refund
West Brom has sent letters to affected borrowers apologising for the error and explaining how they will be reimbursed.
It said borrowers should receive a refund within 14 days of receiving the letter providing the bank account used to make mortgage payments with the Society was still active.
If you believe you may be entitled to a refund and haven’t received a letter you should get in touch with the Society. West Brom has set up a Q&A section on its website for borrowers with any queries.
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