The mortgage lender was found to have unfairly charged customers in arrears for the servicing of mortgage accounts and will be paying out £7.7m in customer redress as well as a £2.8m fine to the FSA.
Customer charges for non payment of the monthly mortgage payment by direct debit when in arrears will be refunded an average of £117 while refunds of early repayment charges applied to arrears fees and charges will be around £14. Refunds of about £45 will also be given for part of the solicitors instruction fee which was more than the actual cost.
GMAC-RFC says: “We want to apologise to customers affected. We have worked openly with the FSA to review and revise our procedures for managing accounts in arrears.
“We’ve been able to work quickly as a result of cooperation with the FSA and changes already made to our procedures and training programmes over the last eighteen months. Furthermore, we have established a customer contact and redress programme in relation to certain arrears charges.
“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 additional 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.”
Customers who have been in arrears and currently have a mortgage with GMAC-RFC or have remortgaged and remain at the same address do not need to take any action.
GMAC-RFC will send a letter with details of the redress programme to any customer with a mortgage in arrears who was charged one of the fees since November 1 2004.
After this letter, existing customers of GMAC-RFC will receive an automatic re-crediting of the charges plus interest to their mortgage account.
For past customers who were in arrears and have already redeemed their mortgage with GMAC-RFC, the company will send a letter to the last known address to arrange a refund.