Yorkshire Building Society prioritised the collection of ad hoc payments from borrowers in arrears over sustainable arrangements, and failed to deal appropriately with those suffering from serious illnesses.
Earlier today the FCA fined the mutual £4.1m for failings in the way it treated mortgage customers experiencing payment difficulties.
A skilled person review carried out in May 2013 found that in 64 out of 87 cases, customers were not treated fairly and in 52 of these cases customer detriment could be identified.
The FCA final notice reveals this included a failure to consider the individual circumstances of customers, failure to consider all payment options, seeking inappropriate payments and significant and unexplained delays in finding solutions.
The regulator found there was no policy for identifying and treating customers in sensitive positions, such as those with serious and mental health illnesses. As a result, staff did not always deal appropriately with such customers.
Errors in the automated system for contacting customers led to Yorkshire Building Society mistakenly continuing to contact one customer, who was seriously ill and complained of feeling harassed.
The mutual also failed to adequately assess customers’ financial circumstances.
A lack of appropriate guidance for call handlers meant they did not consistently probe into customers’ circumstances and establish whether customers’ problems were short, medium or long-term.
In the case of one customer who spent time in hospital and planned to return to work shortly, Yorkshire Building Society failed to consider short-term solutions.
Call handlers were also willing to accept the explanations of customers without sufficient probing. In one case, call handlers failed on 30 occasions to challenge a customer’s promises to pay the full arrears.
Rather than attempting to find overall solutions, the FCA found call handlers sought to take payments as a “contribution” and encouraged customers to “make any payment”.
They also accepted payments from friends and family, or on credit cards without considering the effect on the customer’s overall debt.
The FCA says the effect was to prioritise the collection of ad hoc payments ahead of the agreement of a long-term, sustainable solution.
The regulator also found that Yorkshire Building Society was reluctant to repossess properties even when the borrower had moved out and the property was empty. Delays led to customers accumulating further interest and fees.
The FCA says it was not recognised at a managerial level that delays in agreeing solutions was detrimental to customers financially and therefore unfair.
One senior manager believed the delay was detrimental to Yorkshire Building Society rather than to the customer.
The mutual also repeatedly charged customers direct debit refusal fees. One customer was charged a fee on 32 occasions, totalling £800.
In the 12 months to 31 July 2012, Yorkshire Building Society charged total fees and interest payments to borrowers in arrears of £47.3m.