GLC challenges excessive mortgage charges

Govan Law Centre (GLC) is raising a number of actions seeking repayment of excessive and unfair fees applied by lenders when homeowners fall into mortgage arrears.

The worst offenders are 'sub-prime' mortgage lenders who typically levy four types of monthly fees: ‘Unpaid Direct Debit Fee’ (£25), ‘Arrears Management Fee’ (£50), Late Payment Management Fee (£25), and ‘Litigation Management Fee’ (£115).

GLC believes these fees do not reflect the actual administrative cost to lenders, and if so, are contrary to legal rules made by the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000. Separately, many of the charges are unfair or excessive to consumers in terms of FSA rules.

Several sub-prime lenders have already been fined by the FSA for failing to treat mortgage customers fairly. In October 2009, GMAC-RFC was fined £2.8m, while in December last year the Kensington Mortgage Company Ltd was fined £1.22m for the unfair treatment of its customers in arrears.

GLC's Principal Solicitor, Mike Dailly said: "Although some lenders have already been fined for excessive mortgage arrears charges, the reality is such charges have simply been added to customers' mortgage accounts. Lenders should voluntarily refund excessive charges, but they won't, which is why GLC hopes to establish a quick route to refunds for our clients".

GLC challenges excessive mortgage charges

FSA takes UK banks to task over complaints handling

The Financial Services Authority (FSA) is taking tough action after finding weaknesses in five banks handling of customer complaints. It is understood the worst UK banks as regards complaint handling include Lloyds TSB (Bank of Scotland), Barclays, Royal Bank of Scotland, and Santander (the former Abbey National).

As a result of the review, five banks are undertaking major changes to the way they deal with complaints and two of the five banks have been referred to enforcement for further investigation. The review looked at several banking groups responsible for over 70% of the complaints firms receive and report to the FSA and over 60% of those resolved by the Financial Ombudsman Service (FOS).

It found poor standards of complaint handling within most of the banks assessed, including:
* A lack of senior management engagement and accountability for the delivery of fair complaint handling;
* Poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers, even in situations where the bank was at fault;
* Poor quality complaint handling by staff in branches and general call-centres leading to inadequate investigations, poor decision making as to the outcome of the complaint and unsatisfactory correspondence with customers;
* Complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank;
* The failure of banks to learn from previous complaints and to make changes to prevent similar complaints arising in the future.

Further information is available on the FSA's site here.

FSA takes UK banks to task over complaints handling