Santander UK forced to clarify terms on 270,000 loans
LONDON, April 19
LONDON, April 19 (Reuters) - Santander has been told by Britain's new financial regulator to contact more than 270,000 borrowers after raising interest rates on mortgages in 2008 without being clear.
The Financial Conduct Authority (FCA), launched this month with a pledge to protect consumers more effectively than its predecessor, said Santander UK must contact the customers about unclear information it gave them before increasing the cap on its mortgage standard variable rate (SVR).
The cap is the upper limit to which a lender can increase its SVR, the rate of interest borrowers move on to after an introductory deal comes to an end.
The FCA said letters Santander UK sent were not clear and that borrowers may not have understood what was going to happen, how it would affect them and the options open to them. It said some borrowers did not even receive a letter.
The new letters will invite customers to complain if they feel they have lost out financially.
The FCA said only a minority of borrowers would be entitled to compensation because redress would depend largely on whether they could have moved to a better deal.
Santander said the majority of its mortgage customers would not have suffered any detriment as a result of the affair. It said all relevant customers would receive a letter informing them what to do.