First Direct bank has been ordered to repay money to loan customers after not including information about overpaying in the small print in loan statement. Under the UK Consumer Credit Act, lenders have to tell borrowers they can pay their loans off early.
The error affects First Direct borrowers who took out a loan after 20th November 2010 and received their first annual statement on or before 3rd July 2014. The issue was brought to light by parent bank HSBC back in August last year.
First Direct bank is contacting everyone who is eligible for a refund, so they need not take any further action. Refunds will be paid from the time that the error occurred.
The bank has argued that most borrowers did not suffer any detriment as a result of the mistake as they were aware that they could overpay anyway.