FSA fines non-advised mortgage firm £28k
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The FSA has fined a non-advised mortgage firm £28,000 over failing to treat customers fairly who took out mortgages and bridging loans.
The FSA has also banned its owner and director, Simon Latham, and former chief executive, Stuart Mason, from performing significant influence functions in the future. Latham has also been fined £17,500.
Fastmoney arranged regulated mortgage contracts, including regulated bridging loans, on a non-advised basis for retail customers. Between August 2005 and March 2010, Fastmoney arranged 370 regulated mortgage contracts and 18 regulated bridging loans for customers.
The FSA says failings in Fastmoney’s non-advised sales process put customers at risk of taking out mortgages where they did not fully understand the loan’s features, risks and costs. These issues were identified by the FSA during a supervisory visit which led to the firm being referred to enforcement.
The FSA found that Fastmoney failed to establish a non-advised sales process which ensured customers took out an appropriate mortgage and were treated fairly and failed to ensure sales staff were competent, adhered to non-advised sales scripts and avoided giving personal recommendations to customers.
Fastmoney also failed to present all options to the customer in a fair and unbiased way, and failed to ensure bridging loan customers understood all the product details, and to clearly disclose the cost of its services.
The regulator also says Latham and Mason failed in their oversight of the business. Latham delegated senior management functions to Mason who did not have the necessary knowledge, skill or understanding. Both failed to supervise, monitor and train staff adequately, and to identify and mitigate risks posed by the business.
Customers of Fastmoney typically had an adverse credit history. In some cases, customers needed to obtain a loan urgently to avoid having their homes repossessed.
The FSA has required Fastmoney to appoint a skilled person to assess the extent of any customer detriment and pay redress if appropriate. The review is still ongoing.
FSA head of retail enforcement Tom Spender says: “Firms and their senior management cannot absolve themselves from responsibility for a mortgage sale because they have chosen to sell on a non-advised basis.
“They must ensure communications with customers are clear, fair and not misleading and that they do not sell a product which is inappropriate for that customer. This is particularly important where those customers are vulnerable, in arrears or facing repossession – it is unacceptable to target such customers and offer products such as bridging loans without giving proper consideration to the firm’s obligation to treat customers fairly.”
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