Update on this
He got them to agree to refund the penalty interest, capitalise the remainder of the arrears and reduce the interest rate. Result!
Thanks very much for your advice Brendan.
Interestingly, they wanted to increase the interest rate until he mentioned that he had had a chat with a friendly solicitor who would be looking over everything before he signed it. Apparently the tune changed considerably when solicitor was mentioned. Makes you wonder how many people are being ridden over roughshod.