LONDON (ShareCast) - Mortgage lender GMAC RFC has been fined £2.8m by the City regulator and ordered to refund £7.7m to 46,000 mortgage customers for failing to treat customers fairly.
The Financial Services Authority (FSA) uncovered
"a number of serious failings" at GMAC (NYSE:
GOM -
news) between 31 October 2004 and 30 November (Frankfurt:
A0Z24E -
news) 2008, linked to customers experiencing arrears and repossessions.
It cited excessive and unfair charges for customers that did not reflect administration costs and proposing repayment plans that did not always consider a customer's individual circumstances.
The FSA also said GMAC, part of US giant GMAC Financial Services, failed to train mortgage servicing staff properly and issued repossession proceedings before fully considering all the alternatives.
"We want to apologise to customers affected. 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," GMAC said.
"We will be writing to customers who incurred these specific charges when in arrears and will re-credit the charges plus interest."
GMAC-RFC set up its UK mortgage business in 1998 and quickly became one of Britain's biggest mortgage lenders before it stopped making new loans last year.
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