FSA bans six mortgage brokers, fines one
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The FSA has banned six individuals and fined one over £130,000 for failings in relation to mortgage fraud.
The FSA found that all lacked honesty and integrity, most had committed mortgage fraud by providing false or misleading details in mortgage applications and a number had deliberately obstructed its investigations.
Neale Morton was the principal and director of Neale Morton IMS Limited, based in Gateshead, Tyne and Wear. The FSA has prohibited and fined him £130,192 for knowing involvement in mortgage fraud and for systems and controls failings at IMS, for which he was personally culpable.
Part of the fine, £5,192, represents a disgorgement of the profit he made from the fraudulent mortgage applications.
The FSA says Morton submitted mortgage applications for himself that used false income details and allowed his firm to be used for mortgage fraud by its advisers and customers.
During the investigation Morton failed to deal with the FSA in an open co-operative way by failing to disclose relevant information. Morton referred the case to the Financial Services and Markets Tribunal but his reference was subsequently struck out.
Two advisers at IMS, Jonathan Smith and Syed Meah, have also been banned. Both produced falsified compliance documents during the FSA’s investigation.
Smith also submitted falsified mortgage applications to lenders on behalf of the firm’s customers and Meah did not notify the FSA that he had been arrested on suspicion of money laundering and had, as a result, been suspended as a mortgage adviser at IMS.
In an interview with the FSA, Smith estimated that approximately five per cent of the mortgage business he submitted while at IMS was “crooked”.
Mortgage intermediary Monika Tewari has also been banned from working in regulated financial services for her involvement in mortgage fraud.
Tewari used different mortgage intermediaries to submit two applications in her own name containing false income information. In one instance she inflated her earnings by 300 per cent from a basic £23,000 to a gross income claimed of £92,000.
Amanakwaa Adu, trading as Distinct Financial Services in Leytonstone, East London, has been banned for failing to demonstrate that he is fit and proper to work in the financial services industry.
Adu used a mortgage intermediary to submit mortgage applications in his name containing false information. In particular, Adu lied about his nationality by claiming he was Belgian when in fact he was Ghanaian, and also inflated his income.
An investigation by the FSA also found that Adu submitted two applications on behalf of two fictitious customers to gain advances for his own benefit.
Tony Oliver, trading as Finesse Financial in Barking, Essex, has been prohibited for his involvement in mortgage fraud and providing false and misleading information to the FSA.
During the course of its investigation, the FSA found that Oliver had provided false information to support his applications for approval under the FSA’s approved persons regime.
Oliver was also found to have submitted a mortgage application for himself as well as a secured loan application, both of which contained false information
These actions bring the total number of mortgage brokers banned to 91.
FSA director of enforcement and financial crime Margaret Cole says: “These individuals put lenders at risk of financial crime and threatened to undermine confidence in the mortgage market, so this action makes the market a safer place.
“Our crackdown on mortgage fraud continues as a priority in our ongoing campaign against financial crime. We have banned more than 90 mortgage brokers over the last three years and the fine on Morton takes the total penalties levied for mortgage fraud to more than £1.7m.
“Mortgage fraud is dishonest and anybody who perpetrates it will increasingly find themselves facing bans, large fines and forced to return their illicit gains.”
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Readers' comments (9)
Alasdair Sampson | 5 Jul 2010 11:58 am
I read this report with interest. A number of the points referred to reminded me of the case of a mortgage broker I defended last year against the FSA on much the same sort of charges. They had banned him too in advance of a hearing on the evidence before the RDC by serving a Supervisory Notice suspending his authorisation. They also served a draft Warning Notice telling him they would whack him with a huge fine.
I argued each and every point the FSA put up with evidence and logic, neither of which appear to be strong suits of the FSA when it comes to investigations in my experience.
In that case the RDC agreed with me. It rescinded all notices and orders against my clients. And it took less than an hour to decide that and to email me to tell me of it.
It is a simple fact that the FSA are in many respects the school playground bully. It applies pressure, imposes deadlines for the IFA to respond to this or that (and yet takes months to revert to you), threatens all sorts of action and doesn't listen to what it is told.
It states that you have to co-operate. It gets to decide what is or is not co-operation.
In every investigation I have dealt with the FSA invites the target IFA voluntarily to vary their permission to exclude the product or type of service being investigated. They even may tell you when its all over you can apply for them back.
As is said in Glasgow - Aye, right!
In one current investigation I am dealing with the FSA, despite a mandate from the client telling the FSA to deal with me directly, emailed the client to say that the FSA thinks it is beneficial to deal directly with the firm.
Rather like the police saying that confessing is good for the soul!
It may be beneficial to the FSA to deal directly with the firm but in my experience it is never beneficial to the firm.
If you stand up to the FSA and argue the facts, the law, their own Rules and logic you stand a better chance of survival.
The FSA will call you to a compelled interview. Watch your back there, this is a taped interview and the evidence recorded will be used against you.
The investigators will tell you are required to answer their questions – but what they don’t tell you is that is your opportunity to ask your own questions, to dispute their evidence and to challenge them. If you do not take that opportunity then the only evidence which is recorded on disk and which appears in the transcript is what the FSA want to be there. And believe me they will state later to the RDC that you had your chance to put forward your case but didn’t take it.
Thereafter the FSA will produce a Preliminary Inquiry Report which they will put to the Regulatory Decisions Committee when they seek to have you sanctioned. You get the chance to respond to it.
The RDC is independent of the FSA Enforcement Officers who carried out the investigation. The RDC will listen to you – but you have to have the evidence to put to them and you need to be able to put the logical argument in law and in facts to them. Make your response robust – if the FSA has been incompetent then I have never any difficulty in saying so. If they have ignored what you have said all along then say so. If I believe they are biased then I say so. I have even stated the FSA have been economical with the truth.
But over and above all of this – you need a representative who knows the FSA, its process, and how it operates, and knows how to stand up to them.
Would you face the police charging you with a serious offence without a lawyer?
Phone me – 01560 3221091
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Baron Bolligrew | 5 Jul 2010 1:28 pm
Alasdair,
Nice explanation.
Thanks.
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Adam Smith | 5 Jul 2010 1:31 pm
I read the Final Notices with interest. Incomes that don't correspond with HMRC records, dates of birth and nationalities that don't correspond to passports, non-existent NI numbers - all looked pretty solid to me. These all seemed to be intelligence-led cases, eiether from IFL (and if you don't know what that is, then you're in trouble) or, in three of the cases, the police.
Whilst I broadly agree in principle with Mr Sampson (comment #1 above), I don't see what he could've done for these people.
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Evan Owen | 5 Jul 2010 2:25 pm
I can see Alasdair Sampson's argument as well as Adam Smith's?
Time and again I was expected to defend advisers, as Alasdair knows full well it is a fact that often what was said over the telephone isn't what we saw when we had the file and the facts before us.
On the other hand we saw instances when the FSA staff were economical with the truth, it appeared to be a personal vendetta or an attempt to increase the prosecutor's stature, and job prospects.
Humans are frail, often selfish, greedy and stupid and this applies to both the regulated and the regulators.
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Leo | 5 Jul 2010 3:01 pm
Most brokers work on the rules set by lenders and guidance given by the lender's Development Managers - specially in the lat 10 years. With almost all lenders, development managers are not their to service the brokers with right guidance but to act as targeted salesmen.
It is the development managers who showed the brokers how to bend the rules and in return brokers lost all sense of balance and got greedy.
Development managers or fly-by salesmen as I call them tend to disappear as soon as lender gets in to trouble.
If FSA wants to investigate the industry they should have set up a dummy brokerage and got in all the BDMs to come in. All this is in hindsight.
What about all the Lehman Bros subsidiaries (3) that had no scruples in their greed to take UK business.
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Anonymous | 5 Jul 2010 3:10 pm
Subtle plug for the business too .... but you might want to check the telephone number, looks like it has one too many digits!
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Anonymous | 5 Jul 2010 3:41 pm
The correct number is 01560 322191. Does he only do business in Scotland?
I found the FSA (and its predecessors) to be economical with the truth too; and often not very knowledgeable, until you get up to a certain level, then they have been very good.
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Julian Stevens | 6 Jul 2010 11:47 am
It seems the FSA regularly gets into difficulties when faced with a lawyer standing up for someone whom it [the FSA] has been expecting to trample underfoot without the tiresome inconvenience of a proper defence.
That must be why the FSA doesn't like firms to record compliance visits and still less to record them.
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Phil Castle | 8 Jul 2010 12:22 pm
We recorded our FSA face to face TCF assessment on the agreement that we would send them a copy.
Once again what goes to the heart of the matetr is what is said on record and why I think an awful lot of potential work for the FOS and also FSCS could saimply not arise if everyone routinely recorded what was actually said and not an edited prece or agenda (including suitability reports).
It sounds like these brokers did get what they desrved, but it is disturbing to hear of Alistair Sampsons experiences of the FSA whoich appears to go against natural jstice in that they appear to simply be looking for fault (any fault) with which to get at someone they have taken a dislike to.
Were it a criminal case, at least you have to be charegd with something first to know what you are being accused of!
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