GMAC-RFC Limited fined GBP2.8million for unfair treatment of customers in arrears and repossessions and will pay up to GBP7.7m customer redress
29th October 2009The Financial Services Authority (FSA) has today announced it has fined GMAC-RFC Limited (GMAC-RFC) GBP2.8million for failing to treat customers fairly and secured redress of up to GBP7.7million (plus interest) for over 46,000 mortgage customers.
Between 31 October 2004 and 30 November 2008, a number of serious failings by GMAC-RFC were identified in relation to its dealings with customers experiencing arrears and repossessions. These include:
- excessive and unfair charges for customers that did not reflect administration costs;
- proposing repayment plans that did not always consider a customer's individual circumstances;
- inadequate training of mortgage servicing staff in handling of arrears and repossessions; and
- issuing repossession proceedings before fully considering all the alternatives.
The case sets a precedent, with the FSA concluding this investigation in a matter of weeks, and the firm working with the FSA to agree a process to enable customers to receive redress as quickly as possible.
As a result of early settlement, the firm qualified for a 30% discount under the FSA's settlement discount scheme. Without the discount the fine would have been GBP4million.
Margaret Cole, director of Enforcement and Financial Crime, said:
"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. Mortgage lenders and third party administrators should read this final notice and the Mortgage Market Review and take action in the interests of their customers."
