The bank would have been fined £1.2m if it had not co-operated with the FSA Deutsche Bank fined over lending
The bank would have been fined £1.2m if it had not co-operated with the FSA Deutsche Bank has become the first financial company in the UK to be fined for “irresponsible” mortgage lending.
It has been fined £840,000 by the Financial Services Authority (FSA) and will have to pay £1.5m in compensation to its borrowers.
The FSA said the bank had been guilty of “irresponsible lending practices and unfair treatment of customers in arrears”.
The mortgages were agreed with high-risk borrowers in 2006 and 2007.
The FSA said that the bank:
failed to show that customers could afford mortgages sold where the term continued after their retirementfailed to consider whether there were cheaper mortgages available for customers seeking self-certified mortgagesfailed to ensure that customers had thought about where they would live at the end of the term if they needed to sell their house to pay off an interest-only mortgage.
When some mortgage customers fell into arrears, Deutsche Bank repeatedly hit them with unfair charges which bore no relation to the actual cost of administering their account, the FSA said.
“This is the first time that we have taken enforcement action against a firm for irresponsible mortgage lending,” said Margaret Cole of the FSA.
“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,” she added.
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