GE Money Home Lending Handed GBP1.1m Fine

Fri, 26 Sep 2008

British loans firm GE Money has been fined over £1 million for over-charging some of its customers on their home loans .

The mortgage lender was ordered to pay a £1.1 million penalty by the Financial Services Authority (FSA) yesterday after "failings" at the firm led to a total of 684 of its borrowers losing an average of £3,000 each, the regulator found.

The FSA said the failings specifically centre on "retention clauses" in mortgage contracts, allowing small amounts of the mortgage loan to be held back from customers by lenders .

GE Money Home Lending charged interest on this withheld money, contrary to industry guidelines, and sometimes failed to return it to the borrower, which therefore resulted in some customers paying more than they needed to on their loans .

Commenting on the penalty, FSA director of enforcement Margaret Cole 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."

George Shave of GE Money Home Lending said: "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."

GE Money Home Lending has paid back over £7 million to customers in compensation since 2004 - when the problems first emerged.
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