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Mortgage lender fined £630,000 for treating customers in arrears unfairly
The Financial Services Authority has fined Swift 1st Limited £630,000 for charging 'excessive' arrears fees. The firm must pay £2.35 million in redress.
Swift 1st Limited has today been fined £630,000 by the Financial Services Authority (FSA) unfairly treating around 2,500 customers in mortgage arrears.
The Essex-based mortgage lender, which is part of the Alchemy Group, will also have to pay around £2.35 million in redress to the 2,500 customers affected.
The FSA said it had found the company guilty of serious failings between June 2007 and July 2009 in relation to ‘excessive’ arrears fees and charges and its dealings with customers in arrears.
- Applying excessive early repayment charges to the redemption figures of customers who were, or had been, in arrears.
- Failing to send all its customers in arrears certain prescribed documents, providing information on the options available to them.
- Focusing on the collection of arrears without always proactively engaging with customers to establish an appropriate ‘arrangement to pay’ based on their individual circumstances.
- Failing to have adequate systems and controls in place to deal with early redemptions which resulted in some customers who redeemed their mortgages overpaying.
What’s more, the FSA added, as Swift specialised in the sub-prime sector, a number of customers who already had an adverse credit status were put at further risk of financial detriment.
Tracey McDermott, acting director of enforcement and financial crime at the FSA, said: ‘Firms must ensure they treat their customers fairly. Many of Swift’s customers were already in a vulnerable position, having fallen into arrears on their mortgage payments, and they could ill afford excessive and unfair fees’.
‘The FSA will take robust action to ensure not only that firms are fined for such failings but also that they identify and compensate customers who have been disadvantaged. The costs of doing so are often much more than the fine,’ she added.
Swift received a 30% reduction in its penalty for agreeing to settle at an early stage – had it not the FSA said it would have fined the lender £900,000.Swift is the fifth lender to be fined for its mortgage arrears handling – since 2009 GMAC-RFC, Kensington Mortgages, Redstone Mortgages Limited and DB Mortgages have received fines of up to £2.8 million.
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by Gavin Lumsden on Dec 10, 2013 at 16:51