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FSA investigates Swift Group for arrears handling practices

Essex-based lender Swift Group has revealed the FSA is investigating the company’s arrears handling and lending practices.

The group’s accounts for the year ending March 31, 2010, show the regulator notified Swift it was conducting the investigation on July 31 last year.

The document says the group, which is the parent company of Swift Advances, is “co-operating fully” with the investigation.

The FSA says there are currently five firms being investigated for their arrears handling practices.

Its accounts also show the lender has also identified an “anomaly” in its mortgage administration system when determining how much some customers owe for the early settlement of their mortgage. The accounts say the problem “has resulted in consumer detriment”.

As a result of the problem, the directors believe the company is likely to incur £9.4m of costs, relating to legal and professional costs, a potential fine and the cost of implementing a customer redress programme.

Swift Advances is also subject to a similar investigation by the Office of Fair Trading, which is looking at the practices of lenders in the second charge mortgage market. The lender says it has not estimated any potential costs relating to the investigation as it is still unclear what the outcome might be.

The group recorded a £9.4m pre-tax profit for the year, which is a significant drop from the £23.8m reported in 2009. Swift says the decreased profit was due to the impact of “regulatory matters”.

Group turnover dipped, falling 10 per cent from £83.5m to £75.1m between March 2009 and March this year.

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