FSA fines Kensington £1.23m for being unfair to clients in arrears

Kensington has become the second lender to be fined by the Financial Services Authority for unfair treatment of borrowers in arrears.
Last week the regulator fined the lender £1.23m and ordered it to pay redress of up to £1.07m.

This follows GMAC-RFC’s £2.8m fine last October for hitting borrowers in arrears with charges that the regulator deemed excessive and unfair. It was forced to pay up to £7.7m in redress.

In March the FSA revealed that it may be forced to reveal the identities of the seven firms it is investigating for arrears handling if the Financial Services Bill is passed in its current form.

It launched an investigation last June into the way some specialist lenders and third party adminis-trators have treated customers in arrears.

The FSA identified a number of failings in the way Kensington dealt with arrears between January 1 2007 and October 31 2008.

It found Kensington focussed on quick repayment of arrears rather than arranging appropriate payment plans and also imposed excessive or unfair charges.

Kensington no longer charges the fees highlighted in the FSA’s investigation and says it will be writing to affected customers.

A spokesman for the lender says: “We apologise to all the customers who were affected and will redress them as quickly as possible.”

Kensington administered an average of 39,042 mortgage contracts per month between January 2007 and October 2008 and outsourced the servicing of its book to HML, as did GMAC-RFC.

But the Kensington spokesman adds: “It was our responsibility to have the right systems and processes in place. These were our customers and it was our responsibility to look after them.”

A spokesman for HML says: “Kensington is a valued customer but we cannot comment on its deal-ings with the FSA.”