bsci, what you've described now doesn't seem to match a letter telling your parents that it was an interest-calculation error.
You seem to be saying that your parents should have had interest-only for 12 months but the bank have left them on interest-only for 5 years so no capital payments have been made for 4 years which should have had capital repayments. If this is the case, then as Brendan says, no-one has been overcharged or underpaid - the only consequence is that your parents repayments are 4 years behind schedule.
How long was the mortgage term? If it was a typical 20+ years, I would have thought the repayments wouldn't increase a whole lot to catch up the extra capital payments that need to be made (and maybe the bank is offering to let the 29K backlog capital be interest only until it is paid off).
But if the bank's letter mentions errors of interest calculation, then I think there is another issue than being left interest-only for an extra 4 years (which isn't a calculation error, it's an administrative one) - can you give us an idea of the amount of the top-up and the mortgage term?