Lender fined over mortgage failings
Tuesday 22 February 2011
A sub-prime lender has been fined £840,000 and told to pay £1.5 million in compensation for irresponsible lending practices and failing to treat customers who fell behind with their mortgages fairly.
The Financial Services Authority, which found a catalogue of failings at DB Mortgages, part of Deutsche Bank Group, said it was the first time it had taken enforcement action against a firm for irresponsible mortgage lending.
The problems uncovered included failing to show that customers could afford mortgages when the term was due to continue after they had retired and not considering whether cheaper loans were available to people taking out self-certification mortgages.
It also failed to ensure customers had thought about where they would live at the end of their mortgage term if they needed to sell their home in order to repay an interest-only loan.
The regulator said there were also problems over the way the lender treated customers who had got into mortgage arrears.
It failed to consider people's individual circumstances or tell them about the range of options that were available to them.
It also applied charges which were considered unfair because they were levied repeatedly or did not reflect the cost of the service.
These fees included a £50 monthly arrears management charge, as well as a £250 fee for instructing a solicitor, which was £83 more than it cost the group.
Margaret Cole, the FSA's managing director of enforcement and financial crime, said: "This is the first time that we have taken enforcement action against a firm for irresponsible mortgage lending.
"Firms need to understand that we will not tolerate lax lending practices and unfair treatment of customers in arrears.
"Firms which fail in their obligations to customers should expect not only a substantial fine but also that they will have to pay back customers who have been disadvantaged by their failings."
The FSA said DB Mortgages had cooperated with it and made significant improvements to the way it handled people who were in arrears.
It also settled with the FSA at an early stage, meaning that it qualified for a 30% discount, without which it would have been fined £1.2 million.
The regulator has previously fined GMAC-RFC, Kensington Mortgages and Redstone Mortgages for failings in the way they have treated customers who have fallen behind with their mortgage.
DB Mortgages was wound down in mid-2008 and no longer writes new business.
The group said in a statement: "As a result of the settlement, DB Mortgages agreed to pay a fine of £840,000 and established a customer redress programme that will include contacting affected customers and refunding certain customer fees.
"Following the identification of the issues raised by the FSA in an industry-wide review started in 2008, DB Mortgages immediately commissioned a third-party review into its lending and arrears collection processes.
"As a consequence, DB Mortgages has improved its oversight of mortgage servicing activities."
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Olympic diver has made his modelling debut for Adidas
- 1 Daniele Watts: Django Unchained star's white boyfriend Brian Lucas confirms LAPD internally investigating 'racist' detainment
- 2 Isis release 'Flames of War' video warning Obama of attacks troops could face in Iraq
- 3 Pakistani passenger power forces two politicians off plane
- 4 Say yes to 'no-poo': It's been three years since I stopped washing my hair
- 5 John Travolta addresses former pilot's gay romance allegations publicly for the first time: 'That was the lowest I'd ever felt'
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Portuguese academic says British are 'filthy, violent and drunk'
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
iJobs Money & Business
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...
£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...
Day In a Page
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony