Watchdog warns UK banks over mortgage cases

Britain’s mortgage lenders face compensation claims from hundreds of thousands of customers for incorrectly handling payment arrears, the country’s financial regulator has said.

The Financial Conduct Authority (FCA) said lenders were sometimes automatically adding arrears to the capital sum of the mortgage and also asking for a separate arrears payment.

This meant customers already in financial difficulties were temporarily overpaying on their home loans, facing extra fees and charges, and further damaging their credit rating.