FSA fines mortgage lender £1.1m

[Legal Beagles]

Sub-prime lender GE Money fined over failings that saw borrowers facing losses of more than £2.3m

More...

[Amethyst]

Re: FSA fines mortgage lender £1.1m

Full FSA decision and PR - Lender fined £1.12 million for exposing borrowers to financial loss and http://www.fsa.gov.uk/pubs/final/gemhl.pdf

From above story

The fine relates to 684 customers, some of them with poor credit histories, who the Financial Services Authority (FSA) said had been put at risk of financial loss as a result of the lender's practices


The FSA said a total of 5,245 GE Money customers had been compensated £7m for the firm's failings.
The customers affected had mortgages subject to a "retention" clause, where part of the money borrowed to buy a house is held back until the buyer has carried out essential work, such as damp proofing and structural repairs.
GE Money's terms and conditions allowed for the retained money to be held for six months and for interest to be charged on the total loan amount during this time.
After the six months the money and accumulated interest should have been released to the borrower or used to reduce the outstanding loan.
But the FSA found that the lender did not make it clear to all customers that they would be charged interest on the full loan during the retention period, and that retained money and interest were not always paid to borrowers or applied to their mortgage at the end of the six months.
In some cases, GE Money continued to charge interest on retention money beyond the six-month period.

[scoobydoo]

Re: FSA fines mortgage lender £1.1m

unbelievable!

[EXC]

GE Money fined £1.2m

GE Money Home Lending fined for 'overcharging' on home loans


http://www.timesonline.co.uk/tol/mon...cle4828021.ece

[Tools]

Re: GE Money fined £1.2m

From The Times

September 26, 2008
GE Money Home Lending fined for 'overcharging' on home loans

Patrick Hosking

GE Money Home Lending short-changed hundreds of its mortgage customers for more than two years by failing to rectify systems failings.
The company, which has half a million personal customers in the UK and whose ultimate parent company is General Electric, was fined £1.12 million yesterday by the Financial Services Authority. The regulator said that 684 customers, including poorer sub-prime borrowers, suffered a financial loss of £2.3 million.
GE Capital Bank, a sister company that has since been sold, was fined £610,000 last year for its role in the mis-selling of payment protection insurance. GE Money Home Lending’s problem was in the handling of retentions — amounts withheld for six months from a mortgage borrower pending repairs to their home. It sometimes failed to explain the terms of these retentions, failed to pay out the retentions on time, continued to charge interest when it was no longer due and failed to deduct retentions when a mortgage was redeemed.
It identified the problem in 2004 but nothing was done until 2006, the FSA said. The fine would have been £1.6 million but for GE’s co-operation. The failings were not deliberate or reckless, the FSA ruled. Margaret Cole, director of enforcement at the FSA, said: “The firm’s failings were serious because a large number of the borrowers, including some with impaired or non-standard credit profiles, were put at risk of financial loss.”
Related Links

• GE braced for blow from financial services

• Thinc Group fined a record £900,000 by FSA

• Broker fined £250,000 for sales tactics

GE has since compensated about 5,500 customers and put an end to the retentions arrangements.
Colin Shave, chief executive of GE Money Home Lending, said: “We regret the events which led to this situation and, although the number of affected borrowers was small compared to our overall customer base, we sincerely apologise to those who were affected.”
The mortgages were sold under the GE, Igroup and First National brands. GE has 200,000 UK mortgage customers.