The Financial Times reported yesterday that Britain's biggest high-street lender, Lloyds Banking Group, will pay refunds worth £500m to hundreds of thousansd of its mortgage customers in the largest consumer reimbursement agreed with regulators.
Approxmiately 300,000 customers with mortgages sold under the Halifax brand between 2004 and 2007 are in line for payments ranging from £5 to thousands of pounds after the bank failed to make clear how much interest they were paying on their mortgage.
The refunds, which amount to 25% of the £2bn pre-tax profit Lloyds is expected to announce for 2010, relate to the disclosure of a cap on the standard variable rate, the rate customers switch to once their initial fixed or tracker deal expires.
On the customers locked into a second Halifax mortgage with early repayment charges qualified for the cap. However Lloyds admitted on Monday that a large number of other customers may have mistakenly believed they would also benefit because the working of the offer document was "confusing".