Yorkshire Building Society Group will refund more than £8 million in administration fees for mortgage arrears after customers were charged incorrectly.
Around 33,900 current and former customers of YBS, Chelsea Building Society, Barnsley Building Society and Accord Mortgages, will receive an average of £247 in refunded fees after the Financial Conduct Authority (FCA) raised concerns about the group's procedures from January 2009 to date.
The total bill for the refunds, which the group has voluntarily agreed to issue, is expected to be £8.4 million.
Firms can only charge an administration fee when a mortgage account falls into arrears by two months or more to cover administrative costs. But the group found that some of its customers may have been charged the fees incorrectly and has agreed to refund all arrears administration fees, including those which were charged correctly, since January 2009.
In a statement, the firm said: "Our customers are at the heart of everything we do, which is why we are taking proactive steps to reimburse those who may have been incorrectly charged arrears administration fees. To ensure customers do not face lengthy delays and uncertainty whilst we review all individual files, we have decided the fairest approach for our customers is to refund all arrears administration fees."
Clive Adamson, director of supervision at the FCA, said: "The FCA has worked closely with Yorkshire Building Society to get to the heart of this issue and ensure that customers are refunded what they are owed.
"We have been encouraged that they are now putting customers first by paying redress to everybody in arrears, not just those who were overcharged. But this is nonetheless a very important reminder that firms must take responsibility for any wrongdoing and make sure their customers get a fair deal."
Letters will be sent to customers outlining the refunds on 25 February, with existing customers' mortgage accounts credited on the same date.
Concerned customers can call YBS Customer Relations on 0800 9230045 or 01242 874998.