GMAC-RFC found guilty of neglecting customers in arrears
Thousands of struggling mortgage customers are to receive
millions of pounds in compensation after a major lender was found
guilty of exploiting those who were in arrears.
GMAC-RFC, which used to be the tenth largest mortgage provider
in the UK, has been ordered to pay back £7.7m plus interest to
customers who had been overcharged for missing payments or for
ending their mortgages early. The lender has also been slapped with
a record £2.8m fine.
Following an 11-month investigation, the Financial Services
Authority found GMAC's arrears charges to be excessive and out of
proportion to actual costs.
The city watchdog, the Financial Services
Authority, found GMAC's arrears charges to be excessive and out of
proportion to actual costs.
Customers in arrears, the FSA said, were victims of "serious
failings" as the lender neglected to take account of its clients'
circumstances before taking disproportionate and unfair measures
such as legal action and repossession.
The FSA also found that staff at the company were inadequately
trained and poorly-designed repayment plans were offered to
customers which only further exacerbated their often desperate
situations.
Compensation
GMAC has said that customers who are entitled to compensation
will receive a letter detailing the payment and will receive an
automatic refund to their mortgage account or by cheque. For
customers who have left the company a letter arranging a refund
will be sent to the last known address.
Despite the large fine, industry experts have accused the FSA of
acting too slowly to protect. In the 11 months it has taken the
watchdog to complete their investigation, thousands of GMAC's
customers have already lost their homes and the FSA's measures do
not include compensation for being repossessed.
Melanie Bien, director of Savills Private Finance, said: "If
action had been taken sooner, many people may have avoided such a
traumatic and unnecessary experience."
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