Halifax pays up after overcharging 12,000

Some Halifax mortgage holders will today receive unexpected cheques of up to £6,000 after the lender uncovered a processing error which overcharged some borrowers for a decade.

Halifax revealed yesterday it overcharged around 12,000 customers who had taken out mortgages with Leeds Permanent between 1979 and 1989. It undercharged a further 28,000 borrowers, but said it will not seek repayment and will write off the loss instead.

Over 3,000 borrowers will receive cheques today, mostly for about £50. A spokesman says "a handful" are between £5,000-£6,000.

Halifax, which merged with Leeds Permanent in 1995, says it identified the error in the spring through its own audit procedures and has kept regulators fully informed.

It adds that around 150 staff have been employed checking all 2m mortgages held by former Leeds Permanent borrowers until October 1989.

However, only 3,000 of the 12,000 are still customers of Halifax, and it is now seeking the whereabouts of the remaining 9,000. It has set up a dedicated helpline, on 0845 6041280, for former borrowers to contact the bank, and will be placing advertisements in newspapers next week.

The error arose on interest-only mortgages where borrowers had either overpaid or underpaid during the period.