Gladstone Brookes | Bank Of Scotland accused of ‘criminal fraud’ over mortgages

Bank Of Scotland accused of ‘criminal fraud’ over mortgages

Bank Of Scotland accused of ‘criminal fraud’ over mortgages

Bank Of Scotland has been accused of ‘criminal fraud’ by Northern Ireland’s Attorney General because of the way the bank treated some of their customers who fell behind with their mortgage payments.

A previous hearing in August had found the bank guilty of double billing some customers who were in arrears.


The arrears had been dealt with by a process known as capitalisation.  This is a standard practice whereby the borrower’s monthly repayments are increased.  Presiding judge Master Ellison ruled that once capitalisation had been carried out, the mortgage should no longer be considered in arrears.

But Bank Of Scotland continued to treat the accounts as if they were in arrears and used this as the basis for bringing legal cases.  Master Ellison said this meant borrowers had been held in fear and were being threatened with repossession on account of ‘an erroneous and fictional arrears balance.’


The verdict accused Bank Of Scotland of ‘having their cake and eating it’ and they decided to appeal the decision which had been seen as scathing by many observers.  But when the matter came up for hearing in Belfast’s High Court, the bank decided to withdraw the appeal.

It was then that Attorney General John Larkin QC, who was in the court, dropped his bombshell.  Far from scathing, he said the judgement had been ‘unduly tender’, claiming there was evidence of ‘criminal fraud under the 2006 Act.’


He acknowledged it was extraordinary for him to intervene in a matter of ‘private law’ between a bank and its customers, but said he had referred the matter to the police and asked them to undertake an investigation.

Stephen Shaw QC, barrister for the bank, said Mr Larkin’s view was ‘based on a misapprehension.’


In a statement issued after the hearing, Lloyds Banking Group (LBG) – Bank Of Scotland’s parent company – said: “There have been no allegations of fraud in these cases.

“We strongly take issue with any implication that this is the case.  We have offered to meet with both the Housing Rights Service and the Attorney General in order to correct the assumptions on which these allegations have been made.

Last resort

Referring to the earlier court hearing, the spokesman said: “We no longer believe that an appeal is necessary in this case and, as such, have withdrawn from the appeal process.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.

“We work hard to ensure that we are providing customers facing financial difficulty with the right support to help ease their circumstances and ultimately help to resolve the situation in what we appreciate is an extremely sensitive time.”

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