The issues arising from data errors in the bank’s debt collection systems are of such magnitude and complexity that the work to correct the errors and to give our debt collection customers a final clarification will extend into 2022. At the same time, the number of customers who are expected to be eligible for compensation is increasing.

“We have made good progress in cleaning up the old errors and ensuring that all affected customers are compensated as quickly as possible. Unfortunately, in this process we have found new potential problems and, as our priority is to get to the bottom of all parts of the matter, provide our customers with correct information and compensate them appropriately, this unfortunately means that we are delayed. This is by no means satisfactory, and we regret the fact that our debt collection customers have to wait some time for a final clarification,” says Peter Rostrup-Nielsen, who heads the central unit established in October 2020 to ensure a more expedient handling of a number of legacy issues, including the debt collection case.

On a continuous basis, Danske Bank has paid out compensation to those debt collection customers where overcollection as a result of the issues in our debt collection systems originally identified has been determined. We expect to conclude this work soon.

Danske Bank has just submitted a status report to the Danish Financial Supervisory Authority (the Danish FSA) on the work to remediate the data errors in the bank’s debt collection systems. The report states as follows:

• as planned, we will by 1 July 2021 have reviewed almost all (97%) of the 197,000 debt collection customers cases which could be overcollected as a result of the issues in our debt collection systems originally identified. Almost all of the debt collection cases are affected by data errors, and the outstanding debt will be reduced for the vast majority of cases. However, where it was originally estimated that there was a significant risk of definite overcollection for 108,000 customers, the review has shown that actual overcollection has taken place for less than 15,000 customers.


• as we have previously communicated, we have identified potential additional issues, which also are being reviewed. Currently, it is estimated that the total number of debt collection customers eligible for compensation is expected to increase by a further 10-15,000. As we conclude our analyses or any new potential additional issues are identified, there may be changes to the number of customers eligible for compensation. These potential additional issues also mean that we, unfortunately, cannot yet finalise our review of the cases and provide final clarification to customers about overcollection and compensation or about outstanding debt amounts. This work is expected to extend into 2022.


• while we continue to investigate the matter, customers will not have to resume repayment of their debt for cases in which more than 60% of the debt in default has been repaid and the risk of overcollection is thus the highest. Moreover, no interest will accrue until each case has been resolved. This applies also to approximately 10,500 out of the 197,000 debt collection customers, where collection has been resumed on an ongoing basis following a manual review, as there may be a risk that these cases may be affected by the potential additional issues.


• the status of the 97% of the cases that have been reviewed for the root causes originally identified is as follows:
  
  
  • It has been confirmed that 6,300 customers are to receive compensation, with a total compensation amount of DKK 36 million. Of this amount, DKK 20 million is compensation for overcollected debt, and DKK 16 million is time compensation for the period during which the money should have been at their disposal. The average compensation amount per customer due to overcollection is DKK 3,200 and the average time compensation amount is DKK 2,500.
  
  
  • Some compensation amounts are significantly higher, as a total of 917 customers have received compensation of more than DKK 10,000, of which 13 customers have received more than DKK 30,000. The highest amount paid out is DKK 94,298, of which DKK 66,000 is time compensation.
  
  
• the remaining 3% of the cases – equivalent to 5,600 customers – require further quality assurance due to their complexity. This work is expected to be completed well before the end of the year.


• for a number of cases (about 32,000), insufficient digital data, among other things due to the cases extending far back in time, means that we have based our review on a number of assumptions to be able to provide more clarity in a more timely manner. In these cases, we have applied a precautionary principle and set even more prudent mathematical assumptions, which means that in case of uncertainty, the result of the calculations is to the benefit of the customer.

It is too early to conclude on any potential additional compensation to customers as a result of the potential additional issues. However, it is not considered necessary to make any additional provisions.

As previously communicated, and as required by the Danish FSA, an impartial reviewer is reviewing the steps we have taken and will take in our efforts to correct the errors and pay compensation to all affected customers. The Danish FSA and the bank are in dialogue on a revised timetable for the completion of the impartial reviewer’s work.

We will now start sending out letters to our debt collection customers detailing the status of their case. The vast majority of customers should receive a letter at the beginning of July. In addition, we will also continue to provide regular updates on significant progress in the case on our website.

Danske Bank