GMAC to Shell out £2.8m Fine under the Mistreating Customer Policy of FSA

GMACThe sub-prime mortgage company GMAC was hit with a fine of £2.8m for mistreating customers under the "get tough" policy on specialist lenders of Financial Services Authority.

Depicting the rising complaints about the behavior, the company had also agreed to pay £7.7m in compensation to 46,000 customers, charged erroneously a monthly non-payment fee of £15 while they were in arrears.

In accord to the early settlement, the company managed to slack more, since the case had "set a precedent" and the fine would have been £4m. The FSA said GMAC was penalized for its treatment to customers who had fallen behind on mortgage repayments, or were going through reclamation.

According to report, GMAC was penalized for charging "specific excessive and unfair charges" to about 46,000 policyholders within November 2004 and the end of August this year. GMAC withdrew from the mortgage market in May last year but still has many borrowers on its books.

"This raises serious questions about the amount of time the enforcement process has taken, given that the FSA has known about these problems since mid 2008", said Dominic Lindley, personal finance campaigner at consumer group.

Condemning GMAC unfair fees, the FSA concluded that its repayment plans did not always consider a customer's circumstances and it often began repossession proceedings "before fully considering all the alternatives" and further stated "this case shows credible deterrence in action", as per Margaret Cole, the FSA's director of enforcement.