GMAC fined over unfair treatment
The Financial Services Authority (FSA) has fined mortgage provider GMAC £2.8 million.
The company was also ordered to repay more than £8 million following the unfair treatment of customers in arrears.
According to the FSA, the mortgage provider charged a £15 monthly direct debit fee for non-payment from more than 46.000 customers who were either in arrears, or whose homes had been repossessed. It said GMAC must repay an average of £117 to each account.
Between 21,000 and 27,811 account holders who redeemed their mortgages found that an early repayment fee was applied to arrears charges as well as the loan value. This is estimated to result in an average refund of £14.
The final example of unfair charges were solicitor instruction fees, which for more than 41,000 accounts were found to be £39 higher than the actual cost. GMAC has said its average repayment will be £45.
It is unknown whether some customers were hit with all three charges.
The FSA ordered the company, which is part of the international financial services group GMAC Financial Services, to pay compensation to mortgage customers totalling £7.7 million, plus a flat interest rate of 8%.
It said the firm had qualified for a 30% discount for an early settlement of the fine, which would otherwise have been £4 million.
The FSA said its investigation discovered a number of "serious failings" in GMAC's dealings with its customers.
These were:
:: 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.
:: Issuing repossession proceedings before fully considering all the alternatives.