Swift 1st Limited has been fined by the FSA over mortgage arrears failings and will pay an estimated £2.35 million in customer redress.

The Essex based mortgage lender was fined £630,000 for unfair treatment of some customers facing mortgage arrears.

The firm has also agreed to carry out a programme to provide redress to customers who were in arrears and who were charged certain arrears fees and charges that were excessive. Swift will provide redress to customers who redeemed their mortgages early where it miscalculated the interest on the redemption balance.

It is estimated that the total cost of the redress to customers will be approximately £2.35 million.

The regulator identified a number of serious failings by Swift which occurred between June 2007 and July 2009 in relation to its arrears fees and charges and in its dealings with customers in arrears.

Swift applied certain charges to its customers’ accounts that were in arrears which were excessive in that they did not reflect a reasonable estimate of the cost of administering an account in arrears.

These were arrears management fees default notice fees unpaid mortgage payment fees and litigation fees.

Swift was found by the FSA to have applied excessive early repayment charges to the redemption figures of customers who were, or had been, in arrears and had failed to send all its customers in arrears certain prescribed documents, providing information on the options available to them.

Swift had also focussed on the collection of arrears without always proactively engaging with customers to establish an appropriate ‘Arrangement To Pay’ based on their individual circumstances also failed to have adequate systems and controls in place to deal with early redemptions which resulted in some customers who redeemed their mortgages overpaying.

The FSA considers that Swift’s failings are serious as under FSA rules, a firm must consider the interests of its customers and ensure that they are treated fairly. Swift’s failings continued over a significant period of time and impacted about 2,500 customers. As Swift specialised in the sub-prime sector, a number of customers who already had an adverse credit status were put at further risk of financial detriment.

Tracey McDermott, acting director of enforcement and financial crime, said: “Firms must ensure they treat their customers fairly. Many of Swift’s customers were already in a vulnerable position