Specialist mortgage lender, GMAC-RFC, has been fined £2.8m by the FSA for unfair treatment of customers who were struggling with their repayments.
The firm has also been ordered to pay up £7.7m in redress to over 46,000 borrowers.
Between 31 October 2004 and 30 November 2008, GMAC-RFC was found to have serious failings in the way it dealt with customers who were in arrears or facing repossession.
Problems include excessive administration charges for late payments, proposing repayment plans without considering a customer's circumstances, poor training of staff who dealt with arrears and repossessions, and taking repossession proceedings before discussing the alternatives with borrowers.
Margaret Cole, director of enforcement at the FSA, says: "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."
Cole says other firms should review the case and ensure their own procedures treat customers fairly.
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