It was claimed in an article published in Private Eye that the lender was under scrutiny from the regulator regarding responsible lending practices and whether it had treated its customers fairly.
Private Eye claimed it had been tipped off by an insider at the firm, who said that the FSA had conducted a thorough review of GEMHL in March this year in response to concerns that since 2001, up to 1,000 borrowers had been unfairly charged interest amounting to £2 million.
The article stated: ‘The FSA is expected to focus on allegations that GEMHL customers were charged interest on a part of original loans which was retained, usually pending a survey or repairs. In some cases the amounts retained may never have been released.
In many instances, it was claimed, interest was charged on money that had not been received; capital repayments made against amounts never released and early repayment charges calculated against higher amounts than were owed. This policy may have been in existence since 2001.’
The article claimed that this policy had ended on the residential side last year but that the FSA suspected it may have continued in buy-to-let.
An unnamed souce, said: “The detail in the article indicates that the information must have come from someone within the company.”
GEMHL had no comment to make, and insisted the article was simply market speculation, while the FSA said it did not comment on individual firms.
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