This follows an announcement in December that Northern Rock Asset Management (NRAM), which holds the ‘bad’ assets of the former bank, had found errors in annual statements issued to borrowers which meant they were not compliant with the Consumer Credit Act.
It revealed it had set aside £270m to compensate customers who received incorrect paperwork.
Virgin subsequently undertook a review of its mortgage loans made by Northern Rock and identified the same errors in the paperwork of around 1,000 of its customers.
The lender has contacted all the affected borrowers and refunded the interest paid on these loans. Virgin added it is in discussions with NRAM about reimbursing the cost of the refunds as these loans should not have been transferred as part of the Northern Rock acquisition.
“We have written to all the customers affected and made a goodwill payment to the customers affected,” a spokesperson told Mortgage Solutions.
Its results statement added: “A number of Virgin Money mortgage customers were found to have CCA elements in their mortgage loans and, due to the same non-compliance error identified by NRAM, those customers have been sent documentation that does not fully comply with the CCA.
“Virgin Money has taken steps to ensure that all relevant customer documentation now contains the full wording required by the CCA.”
Virgin Money’s results statement showed that its gross mortgage lending reached £4.9bn during 2012. The lender said this level of lending was greater than the former Northern Rock brand had achieved in any year since 2008. Its share of the mortgage market was 3.4%.
Virgin, which acquired the assets of Northern Rock on 1 January 2012, grew its total mortgage book by £2.7bn across the year. This figure included the purchase of mortgages worth £466m from Northern Rock Asset Management in July.
“In growing our mortgage book, we maintained quality in terms of distribution by LTV band, while increasing our overall book margin,” its results statement said.
Overall, Virgin Money’s annual loss was £8.4m for the year, significantly down on the £59.1m loss recorded for 2011. Virgin said it traded profitably in each of the last four months of the year.
