Some 152,000 former customers of defunct bank Northern Rock are to receive an average of £1,775 in compensation following a paperwork error.
Northern Rock Asset Management (NRAM), the state-owned remnant of Northern Rock plc, will pay out £270m in refunded interest after the bank failed to make mandatory disclosures in customer letters since 2008.
However, the refunds are "not expected to delay materially" the timing of NRAM's repayment of £19.6bn of Government funding. UKAR, NRAM's holding company, identified certain loans where documentation was not compliant with the Consumer Credit Act.
In selected letters and customer account statements, certain paragraphs of mandatory wording were written incorrectly and compulsory information about the amount of credit was not included in the statements.