One of the UK’s leading sub-prime mortgage lenders has been fined £2.8 million by the Financial Services Authority (FSA), for not treating its customers fairly.

The group has also agreed to repay up to £7.7 million in total, plus interest, to over 46,000 of its mortgage customers.

The order is one of the largest ever issued to a loans company for mistreating customers who had fallen behind on mortgage repayments or were facing repossession. As many as 46,000 mortgage customers were charged in an unfair and excessive way.

The mortgage lender withdrew from the mortgage market last year, but some 50,000 borrowers remain on their books.

According to the FSA, the lender made excessive and unfair charges that did not reflect administration costs and proposed repayment plans for those in arrears that did not necessarily consider borrowers’ circumstances.

Some mortgage staff were inadequately trained in the handling of arrears and repossessions, and issued proceedings before fully considering all the alternatives, it was revealed.

The FSA’s Director of Enforcement and Financial Crime, Margaret Cole, says the case is an “excellent example” of what the FSA can achieve for consumers.

She also recommended that the UK’s mortgage lenders read the Authority’s final notice with regard to organisation and take action “in the interests of their customers” where necessary.