The Financial Services Authority (FSA) has fined a Cheadle-based mortgage lender, Cheshire Mortgage Corporation £1.2 million for failing to treat customers fairly in the sale of mortgages and arrears handling.
Chief executive Henry Moser has been fined £70,000 and agreed to step down from his role within three to six months.
The firm’s compliance director, Andrew Lawton has also been fined £13,500 and banned from holding a significant influence function.
The regulator has also required the firm to carry out a redress plan of £2 million to around 2,000 affected customers.
The failings occurred from October 2004 to the end of 2009. The FSA found that the firm failed to treat some of its customers fairly when they fell into debts, was unable to always demonstrate that mortgages it sold were affordable, and did not always communicate regularly or fully with its customers.
The regulator found that it overcharged some customers in arrears and applied arrears charges inconsistently and unfairly. In some instances, customers were notified of charges after they had been incurred.
The FSA also found that Cheshire Mortgage Corporation would transfer customers to an in-house company and charged customers £150 for it.
It also said that as chief executive, Moser, was ultimately responsible for the actions and compliance of the firm and he failed to ensure the firm was being properly managed so that problems would be identified and remedied.
Compliance officer Lawton was also aware of poor practices and failed to put them right and ‘demonstrated a lack of competence and capability in his role as a compliance director’.
Tracey McDermott, FSA director of enforcement and financial crime, said: ‘Cheshire Mortgages Corporation’s lacklustre approach to regulation, combined with very poor practices in collecting arrears, meant that some customers already worried about being able to pay back their mortgages were put under undue pressure and sometimes ended up paying more than they should.’
Cheshire Mortgage Corporation said that is has made significant changes to policies and introduced a robust governance structure aligned to current best practice. It has also made a number of senior appointments to strengthen the management team.
Moser will take the position of non-executive director after stepping down as chief executive.
It said: 'We sincerely apologise to any customers that may have been affected and have been actively contacting those customers to ensure that matters are appropriately addressed in a timely manner.
'We are pleased to have reached resolution with FSA on these matters and look forward to continuing to focus our attention on delivering high standards of service to our customers.'