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Debt collection

In 2004, we introduced a new IT system to process debt collection cases. Unfortunately, this resulted in some data errors that caused us in some cases to collect debt that was time-barred (out of date) or to collect a larger amount than the customers owed us. The errors also mean that, for at large number of our debt collection customers, the registered outstanding debt is incorrect.

In May 2019, a comprehensive investigation was launched and the relevant authorities were notified. Since then, we have been working intensely to find a solution to the problems and compensate the affected customers for potential overcollection in relation to their overdue debt. Progress has been made on an ongoing basis, but at the same time, the scope and complexity of the case have increased. This means that the timeline for resolving the issues could extend beyond 2024, which is unsatisfactory for our customers and Danske Bank.

On the basis of extensive analyses, we have therefore worked to develop an accelerated solution that provides clarity for the vast majority of our debt collection customers. This means that a total of approximately 245,000 debt collection customers will be informed that their debt is set to zero and that their debt collection accounts will be closed. At the same time, we will compensate customers for any potential overcollection related to the additional issues on the basis of a data driven model.

To mitigate the fact that using a model is less precise than manual reviews, the model has been designed to increase the level of customer compensation to the benefit of the customer. 

We have begun outpayment of compensation based on the model and we expect that the vast majority of customers, who – based on the model – are entitled to compensation will be notified before the end of 2023. Customers, who are entitled to compensation, will be notified directly by the bank.  

Customers with accounts transferred for debt collection after we initially suspended our debt collection as of 1 October 2020 are not part of the solution. This is because their debt collection is significantly less affected by the errors in our historical debt collection systems. We will communicate directly to the debt collection customers whose debt we will resume collection of.

Also, a small number of other case types, for instance corporate bankruptcies, are not covered by the accelerated solution. These cases will be subject to a manual review to determine if any overcollection has occurred.

The degree of complexity for the debt collection issue is highest in Denmark, where the analyses have been ongoing for a longer period than in our other markets. We will inform regulators and customers of the approach for other markets at a later stage.

Number of customers whose debt collection accounts will be closed

On the basis of extensive analyses, we have developed an accelerated solution that provides clarity for the vast majority of our debt collection customers.

Numbers below updated on 31 August 2022

Approx. 155,000 customer cases have been closed previously, and the customers will now be informed hereof

Approx. 90,000 debt collection customers’ debt will be set to zero, and we will not collect debt

Approx. 7,000 customers transferred for debt collection as from 1 October 2020 are not covered by the solution

A small number of other case types, for instance corporate bankruptcies, are not covered by the solution

Timeline

  • We present an accelerated solution to the debt collection case that provides clarity for the vast majority of our debt collection customers.
  • A new report of the impartial reviewer on the investigation of the errors in Danske Bank’s debt collection systems is published.

    Read the report 
  • On 27 April 2022, we receive four orders from the Danish Financial Supervisory Authority in relation to the data quality issues in our debt collection system.

    Read more
    Read our comments

  • The impartial investigation of the debt collection case initiated by the Danish Financial Supervisory Agency, for which KPMG and Poul Schmidt were subsequently appointed to conduct, is extended and expanded. This naturally follows from the work to correct the errors in our debt collection may be extending beyond 2022.

    Read more

  • The report of the impartial reviewer on the investigation of the errors in Danske Bank’s debt collection systems is published.

    Read the report

  • We send follow-up answers to the Danish FSA with a further elaboration of the problem of the erroneous estate cases.

    Read the update here

  • Danske Bank submits a status report to the Danish Financial Supervisory Authority on the work to correct the data errors in the bank’s debt collection systems.
    Read memo her

    Subsequently in August, we send an update to the Danish Financial Supervisory Authority that further details the quality assurance of the review of 5,600 debt collection customers.
    Read update here

    We send follow-up answers to the Danish FSA with an up-to-date status on our analyzes of the additional issues, including the problem of the erroneous estate cases.
    Read the update here

    We send follow-up answers to the Danish FSA with a further elaboration of the problem of the erroneous estate cases.
    Read the update here

  • The DFSA and KPMG/Poul Schmith, the impartial reviewer, extend the review period until the end of October 2021 to better align with all the necessary adaptations of systems and processes as well as the investigation of the additional possible errors identified.

  • On 10 February 2021, we respond to the Consumer Ombudsman’s request for information about Danske Bank’s handling of data flaws in its debt collection systems and use of external debt collection agencies.

    Our response also includes relevant information about specific customer cases as requested by the Consumer Ombudsman.

    Read response
    (The response is available in Danish only).

  • Together with the Danish Financial Supervisory Authority, Danske Bank appoints KPMG and Poul Schmith to conduct an impartial investigation of the measures taken and to be taken by the bank to correct the errors in the bank’s debt collection process and of the bank’s IT systems for debt collection. 

  • The Danish Financial Supervisory Authority orders Danske Bank to arrange for an impartial investigation of the measures taken and to be taken by the bank to correct the errors in the bank’s debt collection process and of the bank’s IT systems for debt collection.

    Read more

  • On 20 October 2020, we provide an account of the measures implemented to ensure compliance with the orders issued by the Danish Financial Supervisory Authority (DFSA).  

    We also inform the DFSA that a total of 28,000 customers have had their debt collection suspended to further minimise the risk of overcollection of debt, while 61,000 customers have been offered to suspend  repayment.

    Read more

  • On 21 September 2020, we receive four orders from the Danish Financial Supervisory Authority in relation to the data quality issues in our debt collection system.

    Read more

  • To further minimise the risk of overcollection of debt, we suspend collection in some 17,000 debt collection cases until they have been reviewed as part of the ongoing efforts to remediate the errors identified in the debt collection system. We also suspend interest accrual on all active debt collection cases unless it has been verified to be correct.

    Read more

  • We submit its response to the Danish Financial Supervisory Authority’s (DFSA) request for further information about Danske Bank’s handling of the errors found in its debt collection system, which we have been working on since May 2019. 

    The response includes a description of the root causes of the errors identified, the historical knowledge about the data errors, Danske Bank's handling of the errors and the extent of the problem.

    Read response

  • We begin informing customers affected by overcollection directly by letter and begin paying compensation. We also publish information about the issue on danskebank.dk

  • During May 2019, we initiate an extensive analysis of the root causes of the issues with the debt collection system.

    Tasks are initiated to ensure that all aspects of the system flaws are investigated and rectified, in particular with the purpose of identifying all financially affected customers in order to compensate them in full.

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