Mortgage firm penalised
Article source: www.news.bbc.co.uk
GE Money Home Lending, the UK mortgage lender, has been fined a record £1.12 million by the Financial Services Authority (The FSA), the UK regulator. The move by the Financial Services Authority comes after revelations confirmed that over 680 GE Money Home Lending customers had been cheated out of an average of £3,000 each.
The clause in question in their customer’s mortgage contracts allowed GE Money Home Lending to hold back part of the customer’s mortgage for up to 6 months, until they made vital repairs to their properties.
Although these types of clauses, which allow mortgage lenders to hold back certain amounts of the mortgage payment, are common place, what happened in this situation was slightly different. The lender had not made it clear to the customers, that, although they were holding back part of the mortgage due to them, they would still be paying lending charges on the full value of the home loan.
When some customers came to either paying off their mortgages, or transferring to a 2 year fixed rate deal with another lender, the firm did not always properly calculate the final amount due. The retention money and the interest on the part of the loan which was held back were not always taken into account properly; this meant that customers were often paying more back than they should have been.
Margaret Cole, the Financial Service Authority's director of enforcement commented; "The firm's failings were serious because a large number of borrowers, including some with impaired or non-standard credit profiles, were put at risk of financial loss."
Although GE Money Home Lending was at fault, it did report the matter to the FSA in November 2006. GE Money Home Lending has so far, in total, paid back over £7 million to over 5,000 affected customers; the mortgage lender commented that a handful of customers who had been affected are still being traced.
"Our customers can be assured that we have taken this matter extremely seriously and have thoroughly reviewed our systems and processes to ensure this could not happen again," said GE Money Home Lending’s Chief Executive Colin Shave.
The Financial Services Authority added that this matter was made more serious because it put many borrowers, some with impaired and others with non-standard credit profiles, at risk of financial hardship.
About GE Money Home Lending
GE Money Home Lending is the trading name for GE Consumer Finance Group and GE Capital Bank Ltd; it was born when General Electric bought Burton Group’s Finance Business over 20 years ago. The company operates in over 40 countries world wide and employs 4,000 staff in the UK alone. GE Money Home Lending has a wide variety of fingers in a lot of different financial service pies; the company offers residential mortgages, credit cards, loans, re-mortgages, insurance and buy now pay later plans.
The finance house, very uniquely, also teams up with major high street retailers to offer own branded credit card and store card services.
About the Financial Services Authority (The FSA)
The financial Services Authority is the UK Regulator for all providers of financial services and products. Uniquely, the regulator is an independent, non-governmental body. The FSA has been given a wide range of power to control the way that the financial services industry in the UK is run. They have the ability to make rules, investigate companies and enforce the law to ensure that consumers get a fair deal.
Bookmark with: