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£258 million payout for former Northern Rock customers

Thousands of borrowers are in line to get compensation after London’s High Court ruled against former bank Northern Rock.

More than 40,000 loan applicants are expected to receive funds after a legal test case questioned the wording in past loan documents.

The total payout is reportedly £258 million, which will come in part from the British taxpayer as the Government part owns the assets of the failed bank.

A total of 41,000 customers will receive £6,300 each, and the ruling is expected to see other lenders check documents for incorrect wording on loans.

The High Court ruling released on Wednesday was against Northern Rock Asset Management (NRAM).

Northern Rock failed in 2008, with Virgin Money later buying its good assets, and the ‘toxic’ assets nationalised and taken as part of NRAM.

Now part of UK Asset Resolution (UKAR), the assets are in a state-run “zombie bank” that does not take on new business.

UKAR chief executive Richard Banks told Sky News: “We are now considering the impact of the judgement and taking legal advice on whether to appeal.”

“Customers do not need to act at this stage. If any redress becomes due, we will write to all those affected to advise on next steps.”