GMAC fined over unfair charges

The FSA has fined mortgage provider GMAC 2.8 million pounds over unfair charges

Mortgage provider GMAC has been fined £2.8 million and told to repay more than £8 million following the unfair treatment of customers in arrears.

GMAC, which stopped offering new home loans in May last year, was found by the Financial Services Authority (FSA) to have slapped "excessive and unfair charges" on customers in arrears or whose homes were repossessed.

According to the FSA, more than 46,000 mortgage account holders were charged a £15 monthly direct debit fee for non-payment while they were in arrears.

GMAC has estimated the average repayment it will need to make to these accounts is £117.

Between 21,000 and 27,811 account holders who redeemed their mortgages found that an early repayment fee was applied to arrears charges as well as the loan value.

This is estimated to result in an average refund of £14.

The final example of unfair charges was solicitor instruction fees, which for more than 41,000 accounts were found to be £39 higher than the actual cost.

GMAC has said its average repayment will be £45.

It is unknown whether some customers were hit with all three charges.

The FSA ordered the company, which is part of the international financial services group GMAC Financial Services, to pay compensation to mortgage customers totalling £7.7 million, plus a flat interest rate of 8%.