MSE News: Northern Rock pays £270m to 150,000 after gaffe

NorthernRockNewbie

Thanks Treadmill just found it

LovesickFerret

Treadmill wrote: »

These loans will still be on your credit file, including the amounts borrowed and the date they where borrowed and from whom. Might be a good starting point.

Thanks, Treadmill.:)

PAUL67

jamesd wrote: »

Agreed. The money has to end up going somewhere and if the monthly payment amount doesn't change the loan ends up being paid off early and with less total interest to pay as well. What would have been the interest part instead becomes a capital overpayment part.

This in itself makes any refund of interest even more appealing to those who still have the loan running with NRAM as after a few very rough calculations based on my particular loan it appears that if after the refund is applied to my account and i continue to pay the same per mnth i can realistically shorten the loan term by approx 4 - 5 years and the financial saving would be double any original refund due to the ongoing future interest payments been reduced.

rmart

sorry wrong thread

chillxxx

flexrider wrote: »

Excuse my ignorance but this is going to be one cost to the taxpayer like many people have said

but i cant stop asking the following to my self?

when RBS lost 38Billion pounds of taxpayer money-Did they get compensation or is this because northern Rock was saved by the tax payer when Lab was in power from failing you get a compensation

Seems Good for some people but taxpayer money is going again to cover the cost.

They will probably have e and o insurance in place to cover them against this sort of thing

GhIFA

chillxxx wrote: »

They will probably have e and o insurance in place to cover them against this sort of thing

No, cost of this is being borne by the public purse - will be added to the deficit. Which we will all pay for further down the line in tax or cuts.

NorthernRockNewbie

GhIFA wrote: »

No, cost of this is being borne by the public purse - will be added to the deficit. Which we will all pay for further down the line in tax or cuts.

Sorry mate, your completely wrong here. The money will come from the PROFITS NRAM is making! Did you know that they made £790 Million last year pre tax profits?

NowWhat?

From reading both threads running the same story I think that this oversight by NRAM has really highlighted the dis-satisfaction most people have with the products they have been sold.


The CCA is a red herring as until a few years ago most people did not have a clue what a CCA actually was for.With the advent of the PPI scandal more people want to jump on any bandwagon and try to attain a windfall.
Through a broker we unfortunately took out a 5 year fixed rate mortgage with NRAM at 5.5% which was more than other lenders, but at the time this was a rate we were happy with.
The financial collapse happened and mortgage rates came tumbling down - NRAM though still have higher rates than most.
As mentioned by others when NRAM acquired the "toxic" debts the potential to look elswhere was restrictive because of the way they were set up.
This I think is the main issue – the majority of people with NRAM are trapped and will be so for a very long time.

It appears to me that we are in some way being punished for the financial collapse and are being used to recoup some of the losses.
Personally I have had 3 mortgages/remortgages/loans with Northern Rock and had never had any problems.
Since NRAM took over however we have had lots of problems such as- double payments taken out,lack of communication reply,telephone harrassment due to being 2 days late with a payment,rude unsympathetic advisers, etc etc
We used to be able to access our account online which we now can’t do and to this day we are still not sure why our mortgage was assigned to NRAM as we have no other financial debts.
I can fully understand why people are hoping that they receive some of the money back as they are probably just like me and want to get out of this mess as soon as they can.

GhIFA

NorthernRockNewbie wrote: »

Sorry mate, your completely wrong here. The money will come from the PROFITS NRAM is making! Did you know that they made £790 Million last year pre tax profits?

No I'm not:

From the Wall Street Journal report: "
Because Northern Rock was under public ownership at the time of the mistakes, which first occurred in 2008, the compensation payment will affect U.K. public-sector net borrowing, the spokesman said.

It is expected the compensation will increase net borrowing by £270 million in the 2012-2013 financial year, he said, adding that the Office for National Statistics will make the final ruling on how the compensation affects the public finances. "

From the BBC Report: " The £270m bill for the refunds will have to come from the taxpayer, as this section of the bank has been owned by the government since 2008. Labour's Shadow Treasury minister, Chris Leslie, said "The Treasury has admitted that public sector net borrowing will be £270m higher this year as a result of mistakes at Northern Rock."

From the Guardian: " A blunder in the wording of loan statements by the nationalised part of Northern Rock will cost the taxpayer £270m as customers are refunded an average of £1,775 for the error. The Treasury, which is picking up the bill for the long-standing error, said letters sent to customers were not compliant with wording set out in the Consumer Credit Act (CCA).

From The Indepenent: " The compensation bill will increase public borrowing in the current financial year"

Also, the use of the term "profit" is debateable as the treasury is stilled owed £19.6billion in funding it provided to NR, which £790m doesn't make a huge dent in.

Cknocker

Well I received a letter from NRAM this morning, it basically says they are investigating it and will write again within 8 weeks to let me know if my loan is affected.

There seems to be a lot of misinformation around on this one, in one breath they say it mainly affects Together Mortgages (Which I have) and on the other it says its loans after the bank was nationalised in 2008 - as far as I'm aware the together mortgages had disappeared by then.

Also it wasn't until much later that the paperwork changed - I applied for a change of parties last year, they sent the forms out in April, I sent it back a couple of months later, at which point they returned it as they had changed the forms from Northern Rock to NRAM - exactly the same form though - although that may be the technicality I guess.

With regards to who pays, ultimately it is the taxpayer, but the taxpayer also receives the profit from NRAM - which is continually growing, as they don't issue new loans, only take in repayments.