FSA issues £1.1 million fine to mortgage lender

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LONDON – The Financial Services Authority (FSA) has for the first time fined a mortgage lender for its lending processes. The UK regulator has fined GE Money Home Lending £1.12 million for exposing its customers to financial loss due to inadequate management, leading to a lack of adequate control and monitoring systems.

The firm allowed 684 borrowers with regulated mortgage contracts to suffer financial losses of more than £2.3 million before redressing the customers’ losses. The FSA says its action is in line with its Treating Customers Fairly (TCF) initiative. The UK supervisor has previously said 2008 will be the year of reckoning for firms’ TCF performances.

FSA enforcement director Margaret Cole says: “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.”