LONDON (Reuters) - Northern Rock Asset Management, the state-owned remnant of defunct lender Northern Rock plc, is refunding 270 million pounds of interest payments to customers, the government said on Tuesday.
The refund is “likely to increase public sector net borrowing for 2012/2013”, Treasury Economic Secretary Sajid Javid said in a statement to parliament.
Northern Rock Asset Management estimates that 152,000 customers will receive refunds, a Treasury spokesman told Reuters.
The refunds are “not expected to delay materially” the timing of Northern Rock Asset Management’s repayment of 19.6 billion of government funding, Javid said.
The refunds are being made because Northern Rock failed to make mandatory disclosures in loan documentation and customer letters.
Affected customers are now being refunded for all the interest they paid after the mistakes were made in 2008. The mistakes pre-date the separation of Northern Rock plc and Northern Rock Asset Management.
Reporting by Laura Noonan, Editing by Sinead Cruise