Danske Bank Probed by Its Watchdog Over Debt System Mistakes

Denmark’s financial watchdog is launching a probe intoDanske Bank A/S amid signs the lender may have misled the regulator over its handling of debt collection errors that hit thousands of its customers.

The Financial Supervisory Authority has given Denmark’s biggest bank until Sept. 10 to answer a series of questions relating to the case, including exactly when Danske first discovered there was something wrong.

Denmark’s biggest bank, which is still being investigated separately for a $230 billion Estonian dirty money affair, has now landed in a new scandal after it emerged that about 15,000 customers repaid too much in debt. Danske has acknowledged the mistake and says it’s going over roughly 100,000 accounts in an effort to repair the damage.

Read: Danske Summoned by Danish Government to Explain Debt Errors

The Danish government was swift to condemn the error, and says it plans to involve parliament as it looks into the matter. Meanwhile, the bank is growing increasingly unpopular in its home market, with arecent survey in Borsen (taken before the latest scandal) showing that more than half those polled would never use Danske.

Read: Danske Bank Hit by New Scandal Over Debt Collection Errors

The Timing

The FSA said it was informed by Danske last year that errors had occurred in the bank’s debt collection system. Danske told the FSA it was working on fixing the failure and on compensating the customers affected.

“Based on that information, the FSA was under the impression that the bank had acted when the bank became aware of the situation,” the regulator said in astatement.

Already last year, Danske’s law firm warned the bank that the case was so serious that some of the executives involved might be facingprison sentences, according to the Berlingske newspaper.

Danske has apologized for the errors. Spokesman Stefan Singh Kailay called the situation “deeply regrettable,” in a statement earlier this week, and said customers “should of course count on the calculations we make, and we regret that this has not been the case in this instance.”

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