The FSA has fined GMAC-RFC £2.8m for failing to treat its customers fairly on arrears and repossessions.
The regulator has told the firm to pay redress of up to £7.7m plus interest to over 46,000 mortgage customers.
Which? personal finance campaigner Dominic Lindley says for some people who have already faced repossession, the FSA’s action comes too late.
He says: “This raises serious questions about the amount of time the enforcement process has taken, given the FSA has known about these problems since mid-2008.”
The FSA found that between October 31, 2004 and November 30, 2008, GMAC-RFC customers incurred excessive and unfair charges that did not reflect administration costs.
It was found the firm also proposed repayment plans that failed to take clients’ individual circumstances into account, that mortgage servicing staff were inadequately trained in handling arrears and repossessions and that repossession proceedings had been issued before all the alternatives had been considered.
The FSA says GMAC-RFC sent some letters to customers that were either factually inaccurate or did not contain sufficient information to give them a clear and accurate statement of their mortgage account.
The fine would have been £4m but GMAC-RFC agreed to an early settlement and qualified for a 30 per cent discount under the FSA’s settlement discount scheme.
FSA director of enforcement and financial crime Margaret Cole says: “This case shows credible deterrence in action. It is an excellent example of what the FSA’s more intrusive approach can achieve for consumers, and it reflects what we said in our mortgage market review last week about unfair mortgage arrears charges.”
GMAC-RFC apologised to customers in a public statement: “Whilst our arrears charges were in line with the market, in hindsight we fully accept that for certain fees, our estimates of the costs were not proportionate to the add- itional administration actually required.
“We will be writing to customers who incurred these specific charges when in arrears and will re-credit the charges plus interest.”
GMAC-RFC says it will refund an average of £117 for arrears charges on monthly direct that debit mortgage payments customers failed to meet. There will be an average £14 refund for early repayment charges applied to arrears fees and an average £45 will be paid to customers overcharged for solicitors’ instruction fees.