The Financial Services Authority (FSA) of UK has fined Redstone Mortgages GBP630,000 for poor treatment of some customers facing mortgage arrears.
The firm has agreed to redress customers who were charged unfair and/or excessive charges while they were in arrears. It is estimated that the redress will cost the firm up to GBP500,000.
FSA identified a number of serious failings by Redstone which occurred between January 1, 2007 and August 5, 2009 in relation to its mortgage arrears handling processes and in its dealings with customers in arrears.
These include: failing to ensure mortgage servicing staff acting on its behalf had adequate understanding of treating mortgage arrears customers fairly; focusing on reducing arrears to less than two months, regardless of the customer’s personal and financial circumstances; having written policies that led, in some cases, to the unnecessary use of litigation to secure arrangements to pay; sending repetitive, excessive and confusing correspondence; and applying four charges to customers’ accounts that were unfair and/or excessive.
Margaret Cole, director of enforcement and financial crime at FSA, said: “Many of Redstone’s customers were in a vulnerable position, having fallen into arrears on their mortgage payments, and firms should not charge such customers excessive and unfair fees. This is not how the FSA expects lenders to treat customers in arrears.”