FSA fines lender £630,000
Share
The FSA has fined Essex-based sub-prime mortgage lender Swift 1st Limited £630,000 for treating some customers facing mortgage arrears unfairly.
The FSA says Swift has agreed to provide redress to customers who were in arrears and who were charged “excessive” arrears fees and charges. It is estimated that the total cost of the redress to customers will be approximately £2.35m.
The FSA says it has identified a number of serious failings by Swift, which occurred between June 2007 and July 2009 in relation to its arrears fees and charges and in its dealings with customers in arrears.
Swift applied excessive charges to its customers’ accounts that were in arrears, including a monthly arrears management fee, a default notice fee, an unpaid mortgage payment fee and litigation fees.
Swift also applied excessive early repayment charges to the redemption figures of customers who were, or had been, in arrears.
The firm also failed to send all its customers in arrears certain prescribed documents, providing information on the options available to them and failed to have systems and controls in place to deal with early redemptions, which resulted in some customers who redeemed their mortgages overpaying.
The FSA says Swift’s failings impacted about 2,500 customers.
Swift agreed to settle at an early stage and therefore qualified for a 30 per cent reduction in penalty. Were it not for this discount the FSA would have imposed a financial penalty of £900,000.
FSA acting director of enforcement and financial crime Tracey McDermott says: “Firms must ensure they treat their customers fairly. Many of Swift’s customers were already in a vulnerable position, having fallen into arrears on their mortgage payments, and they could ill afford excessive and unfair fees.
“The FSA will take robust action to ensure not only that firms are fined for such failings but also that they identify and compensate customers who have been disadvantaged. The costs of doing so are often much more than the fine.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
Readers' comments (6)
hugh jeego | 8 Sep 2011 11:55 am
Shame no one at the FSA is prepared to look at the charges credit card companies are applying to debts. 29% plus when bank rate is 0.5%, will they always be looking the wrong way?
Unsuitable or offensive? Report this comment
Anonymous | 8 Sep 2011 1:10 pm
FSA fine? It must be Christmas party season again. The FSA have got to find some poor victim (oops, sponsor) to pay for it.
Unsuitable or offensive? Report this comment
Anonymous | 8 Sep 2011 1:26 pm
Isn't a fine on a company for doing wrong by 2,500 customers a good thing?
Unsuitable or offensive? Report this comment
Anonymous | 8 Sep 2011 4:02 pm
Repossession and arrears are extremely stressfull to most if not all people. The one good thing that Brown introduced was the England and Wales Pre Posession Protocol.
An interesting read if you have the time
EXCEPT
When the FOS look at complaints in repossession cases (and there are many - some involving a very hasty and clueless Northern Rock) they appear to forget the protocol exists or that it should even be considered.
Fine them - that is fantastic but remember that it is not all about charges etc but about the process that these rotten lenders need to follow before they reach the repossession stage.
Unsuitable or offensive? Report this comment
gerry | 9 Sep 2011 12:00 pm
What is it with you people,No matter what anyone does you moan. The regulators are there for a purpose. If the industry did not have an appaling record of treating their customers badly and general misrepresentation and dodgy dealings the FSA would not even been thought of. I say, well done the FSA in this instance. If you are having a xmas party, enjoy it. Ignore the snipers, their bullets are actually blanks, just a lot of noise and no effect.
Unsuitable or offensive? Report this comment
Anonymous | 9 Sep 2011 12:50 pm
Gerry, nobody is arguing that fining a Lender that has not followed the guidelines is a bad thing. But the point that you are missing is that the major Banks are doing this sort of thing everday and getting away with it.
As pointed out above how can a Bank justify charging Interest rates in excess of 30% when the Bank Rate is 0.5%.
The FSA has always turned a blind eye to the activities of the major banks and Building Societies, which was proved in 2008 when the absurd lending criteria that they were using was exposed.
The FSA will only come down heavy on smaller companies which break the rules, which in one sense is a good thing, but will allow the banks to flout the same rules shamelessley because the FSA can bully smaller companies but not the banks. To be honest the major banks are more powerful then the FSA and will continue to ignore FSA guidelines regardless. This is why the FSA picks on small "one man band" mortgage brokers and smaller lenders because they cannot fight back.
Unsuitable or offensive? Report this comment