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Bank fined $6.7m for mortgage record failures

Bank of Scotland (BOS) has been fined £4.2 million ($6.7 million) after it emerged the financier maintained inaccurate records for 250,000 of its mortgage customers.

An investigation conducted by the Financial Services Authority (FSA) established that failures in the bank's systems meant this was the case for "considerable periods of time" between 2004 and 2011.

Home loan data was held on two separate unaligned systems during this period, while the regulator also established that manual updates to this information were not always carried out when necessary.

As a result of these problems, a number of customers did not receive the goodwill payments they were entitled to after BOS sent some people banking with Halifax potentially confusing information about alterations to their mortgage deal.

In addition, some 33,700 individuals were then mistakenly contacted, with 22,700 of this group then receiving £20.4 million in damages.

Tracey McDermott, director of enforcement and financial crime at the FSA, commented: "This breach is particularly serious because the inaccuracies built up over a period of seven years."

By Gary Cooper