FSA fines mortgage broker £103,000 for fraud
Share
The FSA has fined mortgage broker Gary Lester £103,000 for knowingly submitting 42 mortgage applications to lenders containing false and misleading income information for his customers and committing mortgage fraud to obtain a mortgage for himself.
The FSA has also banned Lester, trading as Lifestyle Mortgages Limited in North West London, from working within the regulated financial services industry.
The regulator says Lester failed to act as a fit and proper person and lacks honesty and integrity.
In November 2006 Lester significantly inflated his income from Lifestyle to obtain a mortgage for himself.
The FSA also found that 42 out of 48 client mortgage applications it reviewed were based on fraudulent information and of those, 14 were found to have no supporting tax records at all.
Two other Lifestyle mortgage advisers, Julie Hutcheson and Martin Winer, have also been banned from working in financial services for not appropriately scrutinising and challenging the information provided by customers on their mortgage application forms.
FSA director of enforcement and financial crime Margaret Cole says: “The financial penalty reflects how Lester failed to meet the high standards expected by the FSA and this prohibition will make the mortgage market a safer place.
“Lester and his colleagues deserve to be banned and Lester in particular has been dealt with severely to deter others from conducting themselves in a similarly unacceptable way.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
Readers' comments (10)
Julian Stevens | 12 Apr 2010 12:31 pm
Only five years late. What was the FSA doing to prevent this kind of thing back in 2004?
Unsuitable or offensive? Report this comment
Exasperated me | 12 Apr 2010 12:58 pm
Any of the lenders in line for a fine? No? Why?
Anybody going to jail? No? Why?
Is this just another example of the FSA making itself look useful?
Unsuitable or offensive? Report this comment
David | 12 Apr 2010 2:00 pm
What a pathetic position the FSA has put itself in. It authorises lenders to offer self cert mortgages to self employed AND EMPLOYED consumers despite criticism at the time, then acts surprised when the products result in inflated incomes. What on earth did they expect? Have they sacked or fined the people in control of the FSA at the time who stood by whilst these products were introduced and allowed to become the norm? Of course not, they did nothing wrong (northern rock, rbs, Halifax etc, etc, etc) what a load of old rubbish, sooner the conservatives give them all the boot, the better.
Unsuitable or offensive? Report this comment
Peter | 12 Apr 2010 2:26 pm
The FSA should of been doing this since 2000 and then we would not of seen house price rise so high.
When are we going to see ex HBOS Director's and people like Fred Goodwin in the Dock that what I want to know. An ex HBOS director claimed that only 15% of all mortgage application pre 2007 had any income checks carried out.
I used to work at NatWest and things there were not much better.
If the regulator was doing its job then we would not have suffered a Banking crisis. People that do these thing should be fined, jailed and hung out to dry.
People in financial services should stop moaning about the FSA and start understanding that we need it or something like it as without it, there is no way of chucking the crooks out. Although, I run a small firm and the FSA can be a pain I welcome greater checking procedures as I know that this is the only way to keep crooks out of the industry as they always get court in the end.
What really hurts hard-working IFA's is financial scandal as it reflects on us all. I think we all need to learn from the banking crisis and question what are regulator was playing at in not enforcing checking procedures on all financial firms including banks. It amazes me that no chief executive has been prosecuted or fined for serious breaches of both money laundering regulations and consumer credit rules after all they are responsible what happens with in their firms, just as I am.
Unsuitable or offensive? Report this comment
John Harding | 12 Apr 2010 2:50 pm
On what basis does the FSA act in cases like this? Surely it is the 'victims of the fraud' who should be calling in the police and using the law to take Gary Lester to court.
But then again the Courts might ask the lenders to quantify their losses, which would be difficult, to explain why they didn't bother to put 'systems in place' to check for fraudulent applications and to ask the regulator why it had not checked that these systems were in place.
All a bit difficult for everyone particularly with the FSA trying to convince all and sundry that it is 'effective'.
Also the lenders would be opening themselves to potential fines from the regulator that would probably far exceed their potential losses from just 42 fraudulent apps.
Ergo seems much the best way, gets the banks off the hook for not having the systems in place and the FSA for not regulating in the first place. Fine and ban the little guy, keeps the banks sweet and future employment options open for senior personnel!
Unsuitable or offensive? Report this comment
Anonymous | 13 Apr 2010 8:18 am
I thought in this case it was the lenders that spotted the fraud and reported it, leading to the investigation?
I'm not a fan of self cert, but it can be used well for certain individuals, especially where there is more than one income stream. What we appear to have here is a bunch of criminals who used the system.
I'm pleased that someone has been fined, and these individuals can no longer work in the industry. If this acts as a deterrent to even just one individual contemplating the same action, then it will have done some good.
Unsuitable or offensive? Report this comment
Anonymous | 13 Apr 2010 10:56 am
Were the 42 applicants who cleary inflated their income and signed a declaration that it was correct prosecuted for mortgage fraud.
I remember one Peter Mandleson (now Lord Mandleson) doing something similar a few years ago.
Unsuitable or offensive? Report this comment
Adam Smith | 13 Apr 2010 1:03 pm
"Were the 42 applicants who cleary inflated their income and signed a declaration that it was correct prosecuted for mortgage fraud[?]"
Shame we don't know the names, because then we could monitor this using Google Alerts. I should imagine the Met have been roped in as mortgage fraud is a policing priority these days. If I were one of the dodgy customers I'd be FAR more worried about HMRC knocking on my door - they've got much better powers than the police. My money would be on lots of COP 9 cases going on behind closed doors...
Unsuitable or offensive? Report this comment
Anonymous | 13 Apr 2010 2:20 pm
I remember attending a seminar of several hundred advisers and being told to by the lender to send them this type of mortgage because they were not gong to check anything i.e please send us all your "fraudulent" business.
We all knew it was dodgy, my compliance officers knew it was dodgy, lenders (specifically NatWest bank who pulled out of this market knew it was dodgy, so how is it that the FSA have only just realised. Talk about closing the door after the horse has bolted!
Unsuitable or offensive? Report this comment
Anonymous | 18 Apr 2010 8:01 pm
Having been involved in the Finance Industry myself, I know that self cert was an option for those who really did have a messy income pattern but could, at the end of the year, show workable accounts. I also do not understand how lenders accepted all of these apps with no back up? I never managed to get a single deal through without my conscience knowing the client was able to cope and was telling the truth.
Also I totally agree that the FSA put far too much emphasis on the broker carrying the can and almost made it seem like the public has no repsonsibility for their own choices. Almost as though they can read a mortgage form and have the capability of buying property, but if it all goes wrong and they get into trouble, blame the broker.
However that is very different frome someone knowlingly and willingly submitting fake papers, lying about income and thinking they are above the law.
Mr Lester deserved all he got and probably more, since he obviously encouraged his staff to act in the same deceitful way.
Let's hope whatever he chooses to do next is with more honesty and integrity!
Unsuitable or offensive? Report this comment