The Financial Services Authority has ordered the GMAC-RFC mortgage lender to repay £7.7 million plus interest to 46,000 of its customers, after it imposed unfair charges on borrowers who fell behind with their repayments. The company has been charged an additional £2.4 million.

GMAC-RFC apologised and admitted some its charges had been excessive.

“In hindsight, we fully accept that for certain fees our estimates of the costs were not proportionate to the additional administration actually required,” said a spokesman for the lender.

“We will be writing to customers who incurred these specific charges when in arrears and will re-credit the charges plus interest,” he added.

Since its launch in 1998, GMAC-RFC grew to become one of Britain’s largest mortgage lenders, but it stopped offering new loans last year.

The FSA’s investigation into company activity between 2004 and 2008 revealed a series of failings, including “unfair and excessive” charges for people in arrears, the commencement of repossession proceedings before all other options had been considered, and a lack of proper training among staff for dealing with arrears cases and repossessions.

The fine is the largest yet to be levied by the FSA on a mortgage lender.

The FSA is investigating another three mortgage lenders over similar failings and has warned the industry that its ruling on GMAC-RFC would set a precedent for its treatment of other lenders known to carry out unfair practices.

“Mortgage lenders and third party administrators should read this final notice and the mortgage market review and take action in the interests of their customers,” warned Margaret Cole, director of enforcement and financial crime for the FSA.

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