Redstone Mortgages fined £630,000 :: First Mortgage Trust©

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Redstone Mortgages fined £630,000

Redstone Mortgages Limited (Redstone) has been fined £630,000 by the Financial Services Authority (FSA) for it's poor treatment of some of it's customers facing financial hardship and mortgage arrears.

The firm has also agreed to identify and redress those customers who were subject to unfair ( also re: excessive) at the time they were in arrears. Redress costs are estimated to be around £500,000.

There were a number of serious failings committed by Redstone and identified by the FSA. These failings occurred between 1 January 2007 through to 5 August 2009 in respect of it's dealings with those of it's customers in arrears and its handling processes of mortgage arrears.

These areas include:

Failure to ensure that customers in mortgage arrears were treated fairly by mortgage servicing staff and that those staff had an adequate understanding.
Regardless of the customer's financial and personal circumstances Redstone were focused on bringing the level of arrears below two months
Policies that were written that were a pre-cursor to, in certain cases, to the unnecessary use of litigation in order to secure arrangements to pay;
Sending excessive, repetitive and confusing correspondence;
Applying a total of four charges that were considered excessive and/or unfair to customers' accounts

These charges were:

A fee in relation to a returned direct debit charged regardless of the number of times times the direct debit had already been returned unpaid;
Including charges and arrears fees within the calculated balance of an early repayment charge;
Field counsellor visits were charged in full irrespective that some customers had not been informed of their right to cancel or refuse along with the fact that they had not been properly informed of the timing of the visit. Along with advice on cancellation and reduced rate charges.
Litigation fees applied even at such times when such activities were taken by the lender unneccessarily.

Under Financial Services Authority rules, a firm has to pay due regard to its customers interests and ensure they are treated fairly. For a prolonged period of time Redstone were in breach of these rules.

The FSA commented that many of Redstone's customers found themselves in a vulnerable position brought on by falling into arrears. Along with the issue of charging it's customers unfair and excessive fees. The FSA does not expect lenders to treat customers in arrears in this manner. The focus on reducing the level of arrears to below two months took on a one size fits all approach.
Redstone qualified for a 30% discount of £270,000 for settling early.

PO Box 2587, BATH, BA2 6ZA