Building society Newcastle Permanent has confirmed that it is remediating approximately 18,000 customers a total of $4.2 million after overcharging interest on their home loans.
According to the lender, after undertaking a periodic review of its processes, it identified that an “error” had resulted in customers’ offset transaction accounts “not properly linked” to their home loans.
Newcastle Permanent self-reported the issue to the Australian Securities and Investments Commission (ASIC).
In a statement to Mortgage Business, Newcastle Permanent apologised to customers for the error, adding that it would continue working to determine if other mortgage holders are eligible for remediation.
“We sincerely apologise to our affected customers, and are committed to reimbursing all those impacted, and have taken steps to ensure this issue does not reoccur,” the lender stated.
“Owning our mistakes is a core organisational value as we continue to honour our customers’ trust through transparency and putting our customers first in all that we do.”
“Given the complexity of the individual amounts to be calculated on a per customer basis over time, we are taking a staged approach, and have commenced connecting with affected customers, and are making payments to around 18,000 customers throughout 2020,” the spokesperson said.
The lender also noted that it has also established a dedicated customer response team to assist affected customers.
Newcastle Permanent’s remediation action was confirmed amid reports that fellow building society Greater Bank has also remediated 31 customers a total of approximately $56,000 for similar breaches.
However, in an interview with the local media, Greater Bank CEO Scott Morgan said that a review of its processes had not found any systemic issues.
“We’ve got no appetite to hide problems. We just get on and fix them when customers raise problems with us,” Mr Morgan told the media.
“When issues are raised, we try to make sure that it’s not a systemic issue. We made sure there were no systemic issues relating to mortgage offset accounts, picked up a human-related error and made adjustments.”
Last year, NAB also confirmed that it had identified further instances in which it had overcharged home loan customers after failing to properly link offset accounts to broker-originated home loans from between April 2010 and August 2017.
NAB identified an additional 4,930 customers requiring remediation, taking the total to 6,522, with refunds payable totalling over $8 million.
Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.