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Yorkshire Building Society, Chelsea Building Society, Barnsley Building Society and Accord Mortgages are to refund all arrears administration fees charged since January 2009 and interest on those fees.

This comes after we reviewed the way we treated some mortgage customers who had fallen behind in their payments and were charged an arrears administration fee. The issue came to light when the Financial Conduct Authority questioned whether the procedures we followed were robust enough.

We can charge an arrears administration fee when a residential mortgage account falls into arrears by two months or more. The fee covers the administrative costs in dealing with the arrears.

We found that, in the period since January 2009, some of our customers who were in arrears may have been incorrectly charged arrears administration fees.

Our customers are at the heart of everything we do, which is why we are taking proactive steps to reimburse those who may have been incorrectly charged arrears administration fees.

To ensure customers do not face lengthy delays and uncertainty whilst we review all individual files, we have decided the fairest approach for our customers is to refund all arrears administration fees charged since January 2009, plus interest on those fees.

This means some borrowers who were correctly charged will also receive a refund of arrears administration fees.

What we will do next

We will send letters to approximately 33,900 current and former customers to apologise for the situation, outline the refund process and explain how much the customer will receive. The first letters will be sent on 25 February 2014.

Existing customers will have their mortgage account credited on 25 February 2014 with an amount that includes all arrears administration fees charged since January 2009, plus interest on those fees. The refund will appear as a credit on their next mortgage account statement.

Most former customers who no longer have a mortgage with Yorkshire Building Society, Chelsea Building Society, Barnsley Building Society or Accord Mortgages will receive a cheque for the total cost of all arrears administration fees charged since January 2009, plus interest on those fees, once we are satisfied we have their current address. However, if there is a balance outstanding to the Society on a former customer’s mortgage, the refund will be used to reduce the amount owed.

It is expected that the total amount to be refunded will be approximately £8.4m, with customers receiving an average of approximately £247.00 each.

Further information

At Yorkshire Building Society Group, as a mutual organisation owned by our members, we always work in our customers’ interests and maintaining their trust is fundamental to us. We hope our actions in dealing with this issue reflect our commitment to doing the right thing for our customers and treating them in a fair way, something which lies at the heart of the Society’s values.

Any customers who want further information about the refund of mortgage arrears administration fees can call our Customer Relations team on 0800 9230045 or 01242 874998 (lines are open 9am to 7pm Tuesday and Thursday, 9am to 5pm other weekdays and 9am to 12 noon on Saturday).

This is an example of the wording which will be used on the customer contact letters for all brands.