What action has the FSA taken against lenders?

Kensington Mortgage Company Limited was fined £1.225 million in April 2010 for poor treatment of some customers facing mortgage arrears. The FSA identified a number of serious failings by Kensington which occurred between 1 January 2007 and 31 October 2008 in relation to its mortgage arrears handling processes and in its dealings with customers in arrears. These included:

1. Failing to ensure mortgage servicing staff acting on its behalf had adequate understanding of treating mortgage arrears customers fairly;
2. Concentrating on the repayment of mortgage arrears over a short period of time rather than agreeing an arrangement to pay the arrears based on the customer's individual circumstances;
3. Applying charges to customers' accounts that were unfair and/or excessive.

In October 2009, the FSA fined GMAC-RFC Limited (GMAC-RFC) £2.8million for failing to treat customers fairly and secured redress of up to £7.7million (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 included:

1. Excessive and unfair charges for customers that did not reflect administration costs;
2. Proposing repayment plans that did not always consider a customer’s individual circumstances;
3. Inadequate training of mortgage servicing staff in handling of arrears and repossessions; and
4. Issuing repossession proceedings before fully considering all the alternatives.

In May 2005, the FSA fined Abbey National £800,000 for mishandling mortgage endowment complaints and for providing the regulator with inaccurate and potentially misleading information.   The FSA found that, between 1 October 2001 and 30 September 2003, Abbey mishandled around 5,000 complaints, including 3,500 that were rejected when they should have been upheld. Based on industry averages, losses of up to £19 million may have been caused to those 3,500 customers.