More arrears fines may follow GMAC penalty
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More lender and servicer fines over arrears handling could be on the cards following the record £2.8m fine imposed on GMAC-RFC by the Fin-ancial Services Authority last week.
The regulator revealed in June that four firms had been referred to enforcement for investigation over failings in the way specialist lenders and third party administrators handle arrears and repossessions.
GMAC-RFC is the first lender to be exposed as being investigated by the FSA over arrears servicing.
An FSA spokeswoman says: “We said publicly in June that there were other firms being investigated for arrears failings. There are still other cases in the pipeline.”
GMAC-RFC was fined £2.8m last week for failing to treat borrowers in arrears fairly, the biggest mortgage-related fine ever levied by the FSA. The specialist lender has also been told to refund borrowers £7.7m plus interest.
Between October 31 2004 and November 30 2008 the FSA found that GMAC-RFC did not give mortgage servicing staff sufficient training in the principles of Treating Customers Fairly. It also ruled that GMAC-RFC applied unfair customer charges which didn’t reflect the true cost of administering mortgages in default.
GMAC-RFC has apologised to customers and says it has changed its processing and training programmes in the past 18 months.
Julian Wells, director of marketing at Homeloan Management Limited, which does servicing for GMAC-RFC, says: “We have worked closely with GMAC-RFC and the FSA and invested heavily in our operational capability and compliance to ensure we adhere to regulations and the principles of TCF.”
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