The largest bank in Denmark — also one of the largest financial institutions in Europe — announced yesterday that it has suspended all of its debt collection activities and has earmarked $8 million in compensation and restitution for nearly 8,000 customers from whom it overcollected for years. The problem is so pervasive that the bank might not be able to resume any collection activities until 2023 at the earliest, according to a published report.
Danske Bank said it will repay $4.3 million back to customers who were overcharged while also providing additional compensation of $3.6 million.
“The issues arising from data errors in our debt collection systems have proved to be larger and more complex than we originally assumed,” said Peter Rostrup-Nielsen, who is running the unit created to identify and rectify the issue, in a statement. “As we have to make the necessary adjustments in our systems to correctly calculate the outstanding debt, we cannot rule out the possibility that we will not be able to resume debt collection for debt collection customers until 2023.”
The problem first came to light more than a year ago when a regulator in Denmark launched an investigation to determine why the bank wrongly collected debts from more than 106,000 of its customers dating back to 2004.
As many as 20,000 other customers who were in the collections process are eligible to receive compensation of some form, the bank announced. An initial estimate of the total amount of debt that was overcollected is $16 million, according to the bank.
