One of the UK's leading lenders has admitted that statements it sends out could confuse customers about the size of their debt.

In one case examined by Radio 4's Inside Money, Dave McNevin eventually found he owed �5000 less than was shown on his statement.

Alarmed by the size of his debt, Mr McNevin felt he had no option but to sell the home he had lived in for 23 years.

First National Bank is part of the Abbey National Group and has over 4 million customers in the UK.

It is not clear how many of those customers are affected.

It has now promised to review its paperwork in the light of Inside Money's investigations.

"There could be an element of confusion"

First National Board Director Nicola Chard

When confronted with Inside Money's findings, First National Director Nicola Chard admitted "There could be an element of confusion in the documentation that is sent to customers".

Nicola Chard pledged to review the documentation and promised "I will put it right... because I think it is important that no confusion should exist in the customer's mind".

Computer systems

She blamed the problem on the company's computer system.

"The difficulty we have is our systems actually keep the account...

There are some IT technology issues here which we are waiting for some fixes for, so the statement will say one thing and we actually ask for a lower amount."

The discrepancy arises thanks to the controversial way First National treats accounts of customers who fall behind with payments.

Normally, when you cannot repay a loan, the lender will try to negotiate smaller payments.

A County Court Judgement is the formal way this occurs but is normally a last resort.

Usually the debt is frozen after a CCJ but First National continue to levy interest at the rate specified in the original contract.

It can do this because of a term that appears in most loan contracts. But only First National and one other lender actually enforce it.

Rocketing debt

Inefficient administration on First National's part means many borrowers may be unaware of the rocketing debt in their name.

"What has made me so mad is why they left it so long to inform me the debt was going up and up."

Customer Dave McNevin

Mr McNevin found he had interest building up on his account at the rate of 28% for 10 years, without his knowledge.

So even though he made the �10 a month payment the county court told him to, he was in fact getting further into debt.

Lender's promise

Although this interest is shown on statements, the company does not expect customers to pay it all back.

Instead, it has promised customers will only have to pay whatever the original loan would have cost them.

But Mr McNevin was never told this.

When Inside Money began its investigation, he was in the process of selling his home to clear the debt he thought stood at �8,500 pounds.

In fact the true debt was only �3,500.

He said of the error "What has made me so mad is why they left it so long to inform me the debt was going up and up."

But until First National clarifies the documentation it sends out, it is not clear how many other customers will remain in the dark about how much they really owe.