The FSA has fined Capital Mortgage Connections £17,500 for rule breaches including cold-calling and treating customers fairly failings on payment protection insurance sales.
It is the first time the regulator has issued a fine for cold-calling and it came about after an FSA investigation found that 85 per cent of CMC’s business was generated this way.
The probe also found that over 97 per cent of accident sickness unemployment insurance policies sold by the firm were on a single-premium basis.
The FSA says CMC was unable to demonstrate that it advised its customers of the potentially cheaper monthly option and gave suitable pricing information to them.
It has instructed CMC to carry out a past business review to all existing single-premium ASU policy customers.
FSA head of retail enforcement Jonathan Phelan says: “Cold-calling potential customers for mortgage business is against our rules and firms operating in the industry should be aware of this.
“This is the first time that we have taken steps against a firm for undertaking this activity and we will continue to monitor the market for instances of cold-calling. Management is responsible for ensuring that firms comply with our rules and we will act where we find breaches.”
Compliance consultant Adam Samuel says: “The FSA wants to make mortgage advisers understand that regulation exists. It also needs to demonstrate that the regulator is not the wimp that the Office of Fair Trading and Citizens Advice in their more resounding papers on PPI misselling appear to suggest it is.”