Borrowers Beware! Mortgage companies can still be fined even if they are not guilty of mis-selling.
Kensington Mortgage Company has been fined £1.225m for poor treatment of some customers facing mortgage arrears.
The FSA has identified a number of serious failings by Kensington which occurred between 1 January 2007 and 31 October 2008 in relation to its mortgage arrears handling processes and in its dealings with customers in arrears.
These include:
- A fee for a returned direct debit which was charged regardless of how many times the direct debit had already been returned unpaid;
- An excessive fee for cancelled direct debits which did not reflect administrative costs;
- An early repayment charge on mortgage balances which included arrears fees and charges within that balance.
The firm also failed to take reasonable care to organise and control its affairs responsibly and effectively, and to ensure adequate risk management systems.
Its management information focused on the performance of the firm’s mortgage book and the profitability of the business, rather than on treating customers fairly.
Kensington qualified for a 30% discount under the FSA’s settlement discount scheme.
Without the discount the fine would have been £1.75 million.
The FSA has also taken into account that Kensington has made significant improvements to its arrears and repossession processes since the early part of 2008.
As at October 2008, Kensington had approximately £1.1bn of loans on its balance sheet and securitised assets in the region of £2.1bn.
During the Relevant Period, Kensington administered on average 39,042 regulated mortgage contracts a month with a total balance of approximately £4.6bn.
“Treat your customers fairly”- this is the message communicated from the Financial Services Authority (FSA) who has implemented a Treating Customers Fairly (TCF) initiative.