GE Money Home Lending has recently been fined £1.12 million by the Financial Services Authority as a result of alleged unfair practices that saw its customers getting ripped off. The company has been accused of the mis-management of around seven hundred mortgage loan customers, with claims that it lost them over £2.3 million. The company highlighted the problem to the regulator in 2004 but the fine was still applied.

Although the lender had already conducted a study into the problem and compensated its affected customers, the FSA has still imposed the fine, and industry officials said that this shows how seriously the regulator takes failures from mortgage providers when it comes to customers’ accounts. It was revealed that many of the customers that were affected by the problem were sub-prime customers.

An official from the FSA said: ‘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. The firm identified the systems and control failings in 2004, but despite internal recommendations that improvements be made, no corrective action was taken for more than two years. I emphasise that we expect high standards by lenders in their administration of their mortgage book.’

The customers affected were those that took out a mortgage on a property that needed repairs carrying out. GE retained around £3000 from each of these customers for six months, and was meant to return this money plus interest after this period. However, this did not happen in many cases, and the lender either failed to return all of the cash or failed to return the interest for the six month period to the borrower.