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500,000 C&G borrowers may get compensation

Up to half of Cheltenham & Gloucester&#39s one million customers could be in line for compensation after the Financial Ombudsman&#39s ruling against its dual-pricing strategy.

The adjudication this week criticised the Lloyds TSB subsidiary for applying its higher standard variable rate of 7.25 per cent to some customers although its lower C&G variable rate of 6.35 per cent was available between April and September last year.

Around 500,000 borrowers on discount, tracker and fixed rates continued to have their mortgages linked to the higher SVR which the ombudsman viewed as unfair.

C&G says it dropped its dual rates on September 10 last year “because of uncertainties in the marketplace” and now has one SVR of 5.95 per cent.

It is not ready to discuss how it will react to the ruling alth-ough it says it will review the eight-page adjudication before determining its response.

The ombudsman has previously ruled against Halifax, HSBC and Nationwide on dual-pricing and its final decision on Abbey National is expected within the next few months.

A C&G spokeswoman says: “For the moment, there is no need for customers to take any action. A further statement will be released as soon as possible.”

Charcol senior technical manager Ray Boulger says: “C&G probably made the mistake of panicking when it saw other top lenders introducing cheaper rates and decided to introduce the second lower rate.”

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