New precedent for mortgage lenders treating customers unfairly
One of the UK’s leading sub-prime mortgage lenders has been fined £2.8 million by the Financial Services Authority (FSA) for not treating its customers fairly.
GMAC-RFC has also agreed to repay up to £7.7 million in total, plus interest, to over 46,000 of its mortgage customers.
The FSA says the case sets a precedent in that its investigation at GMAC were completed within weeks, reflecting a “more intrusive” approach where firms fail to treat customers fairly.
The regulator found failures had occurred over the four years to the end of November 2008 with regard to customers in arrears or facing repossession.
According to the FSA, the lender made excessive and unfair charges that did not reflect administration costs and proposed repayment plans for those in arrears that did not necessarily consider borrowers’ circumstances.
Some mortgage staff were inadequately trained in the handling of arrears and repossessions, and issued proceedings before fully considering all the alternatives.
The FSA’s Director of Enforcement and Financial Crime, Margaret Cole, says the case is an “excellent example” of what the FSA can achieve for consumers.
She also recommends that the UK’s mortgage lenders read the Authority’s final notice with regard to GMAC-RFC and take action “in the interests of their customers” where necessary.