Bank of Scotland faces charges for mishandling mortgages

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The Bank of Scotland has been accused of criminal fraud for the questionable treatment of some customers who fell behind on their mortgages.

Northern Ireland’s Attorney John Larkin QC made the comments as he attended the bank’s appeal of an earlier court hearing, the BBC reported.

The Bank of Scotland dropped the appeal on Monday.

The previous ruling said that the bank had unfairly double-billed customers whose mortgage payments were in arrears. But Larkin said that this judgement was “unduly tender”, and that there was evidence of “criminal fraud under the 2006 Act”.

The matter has now been drawn to the attention of the police, Larkin added.

The bank’s legal representative said that Mr Larkin’s view of the matter was “based on a misapprehension”.

The original case focused the way in which the bank handled late mortgage payments. BOS added arrears to the intial mortgage borrowing, a standard practice which is called capitalisation and increases the borrowers’ monthly payments.

One capitalisation had taken place, however, the mortgage should no longer be considered in arrears, and the borrowers should not be subject to legal action from the bank.

The judge said that because BOS had brought legal cases in this way, borrowers had been held in fear and were being threatened with repossession on account of an “erroneous and fictional arrears balance”.

In a statement issued after the court hearing, spokesperson for Lloyds Banking Group said: “We no longer believe that an appeal is necessary in this case and as such have withdrawn from the appeal process.”

“We would reiterate that repossession is always a last resort,” they added.

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