The financial watchdog has slapped a fine on DB Mortgages, the first time a mortgage lender has been censured for "irresponsible lending" and the fourth time a lender has been fined in the past two years.
The Financial Services Authority (FSA) announced yesterday that it had fined DB – an arm of Deutsche Bank that was wound down in 2008 – £840,000 and secured redress of about £1.5m for the company's customers following "irresponsible lending and poor treatment of customers in arrears".
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."
DB's fine was reduced following co-operation with the regulator. It is understood the FSA is scrutinising other firms over irresponsible lending.
Three other lenders have been forced to settle with the FSA since October 2009, when GMAC-RFC was fined £2.8m for "serious and sustained failings by GMAC in its dealings with some of its customers in arrears or facing repossession". Last April, the FSA imposed a £1.2m fine on the Kensington Mortgage Company over inadequate risk management systems, while Redstone Mortgages was fined £630,000 three months later for the same failings.
"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," Ms Cole said.
The FSA published proposals last summer to establish stronger standards for responsible mortgage lending, as well as providing protection for vulnerable customers. Consultation on the proposals closed in November.Reuse content