UK FSA fines GE Money Home Lending 1.12 mln pounds
LONDON, Sept 25 (Reuters) - The UK Financial Services Authority said it has fined mortgage provider GE Money Home Lending 1.12 million pounds ($2.08 million) for overcharging its customers.
The FSA said some GE Money Home Lending customers collectively suffered a loss of more than 2.3 million pounds after the company continued charging them interest on retained portions of their home loans after they had been released.
The watchdog said GEMHL, a unit of General Electric (GE.N), had also in some case failed to deduct retained cash when mortgages were redeemed, with borrowers overpaying as a result.
Under a retention mortgage contract, the lender withholds part of the full loan for a six month period, typically to pay for essential repairs to the property. The retained sum, plus accumulated interest, is released to the borrower after the six months are up.
"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," said FSA Director of Enforcement Margaret Cole.
The watchdog said GEMH's flawed systems and controls were to blame, and noted that it took the firm two years to remedy the problems after first identifying them in 2004.
"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," GEMH Chief Executive Colin Shave said.
GEMH reported the issue, and had fully compensated all affected customers, the FSA said, adding that it had taken this into account in setting the penalty. (Reporting by Myles Neligan; Editing by Quentin Bryar)
