Danske Bank admits it knew of erroneous debt collection for years

COPENHAGEN: Danske Bank admitted on Friday it had known for years that it was collecting outdated or excessive debt from customers and had not properly addressed the problem.

Denmark's financial watchdog last week launched an inquiry into how Danske had wrongly collected debt from up to 106,000 customers since 2004 due to IT system errors.

"There has been knowledge about at least parts of the problem in different parts and levels of the organisation, including leaders, during the years," Denmark's largest bank said in a statement.

"Despite attempts to manage the problems, the underlying data flaws were never fully addressed, and unfortunately this has caused the issues to continue for several years," it said.

Danske is reviewing all potential cases to ensure customers are fully compensated. It estimated between 10,000 and 15,000 customers are entitled to compensation and said it will review all cases by July next year.

The erroneous debt collection had also potentially resulted in customers paying the wrong interest on debt collection fees, erroneous data for court cases, agency fees and the inaccurate reporting of customer tax information, Danske Bank said.

As of Sept, 1, a total of 395,638 Danish crowns ($63,015) had been paid back to 326 clients, a majority of which had been compensated less than 1,000 crowns, Danske said.

The bank said on Thursday that as part of the review it would pause collecting debt from 17,000 customers.