Northern Rock abandoned its old accounting policies regarding incentivised mortgage products because they were stifling the business, not because it wanted to bolster profits, finance director Bob Bennett said this week.
Bennett denied that last week’s move to extend the period in which these products are written off, from three years to the life of the redemption period, was anything other than a reaction to customer demand and maintaining shareholder value.
‘The accounting policies were dictating the commercial realities of being in business. The most prudent way to treat these products is writing them off up front, but that means that shareholders have to accept the volatility of profits, and we want to say we are a long-term business,’ he said.
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