Staff at the part-nationalised bank failed to include key details in the loans’ annual statements, including the amount which had been borrowed.
The bank estimates that some 152,000 customers will receive £1,775 each. This amount reflects the interest that has been paid on the loans since October 2008.
Errors were discovered following an investigation by UK Asset Resolution (UKAR), which looks after bailed-out banks for the government.
“Northern Rock Asset Management is acting in accordance with its legal responsibilities and we are determined to do the right thing for customers and the taxpayer,” said Richard banks, the chief executive of UKAR.
“We will be writing to all customers who are affected and advising them on next steps. We have not received any complaints or claims as a result of this matter and as far as we are aware it has not resulted in financial loss for customers.”
The £270m bill for the refunds will come from the taxpayer, as this section of the bank has been owned by the government since 2008.