Specialist Loan Company Fined £2.8 Million
A couple of years ago, the Financial Services Authority (FSA) introduced the principle of “treating customers fairly” which would apply to all companies operating in the regulated financial services industry, including banks, building societies and specialist home owner loan companies.
This week, the FSA has announced that it is to fine the specialist lender GMAC-RFC £2.8million for how the company has failed to treat its home owner loans customers fairly. The company will also have to repay money back to loan customers who have suffered financially as a consequence, of around £7.7 million plus interest.
The fine comes after the FSA identified a number of serious failing on the part of GMAC-RFC in how it dealt with its customers who were struggling with their home owner loans and missing repayments, thereby building up loan arrears on their accounts.
The unfair treatment took place between the end of October 2004 and the end of November 2008 and includes: excessive charges and fees to handle loan arrears cases, suggesting repayment plans for customers with loan arrears which did not fit their personal circumstances, poor levels of staff training for dealing with arrears and repossessions of loans and taking action for repossession before the alternatives had been fully considered.
A spokesman for GMAC-RFC said “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.”
