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FSA bans three and fines fourth broker for mortgage fraud

The FSA has banned three mortgage brokers from working in regulated financial services and fined another £17,500 over mortgage fraud and advice failings.

The latest actions bring the total number of mortgage brokers banned to 84.

Jason Phillips of Lancaster House Mortgages of Colne in Lancashire has been banned for submitting nine mortgage applications using false employment information and inflated salary figures.

The FSA concluded that Phillips was attempting to make financial gains and exposed lenders to the risk of substantial losses; his actions also threatened to undermine confidence in the mortgage market.

Noel Smith, director of South London-based Andrew Copeland Mortgages Limited has been fined £17,500 after poor management controls and compliance monitoring led to 224 customers being exposed to the risk of receiving unsuitable advice and left the firm open to abuse by mortgage fraudsters.

Smith has also had his FSA approval to perform management functions withdrawn for systems and controls failings and for exposing his business to the risk of being used to further financial crime.

Ashok Sharma of Ash Commercials (UK) Limited submitted two mortgage applications each for two customers but failed to notice obvious discrepancies in the applications. These irregularities should have alerted him to the risk that the customers were using Ash Commercials to commit mortgage fraud.

The FSA’s investigation also revealed that Sharma had provided mortgage advice when not qualified to do so. He also failed to comply with a legal requirement to provide the FSA with a report from a third party on the quality of the advice he gave to customers.

Due to these failings, the FSA concluded that Sharma is not fit and proper and has banned him from working in regulated financial services.

John Apicella, trading as Mortgages 4 You, has been banned for lack of competency by leaving his business open to the risk of involvement in financial crime. Apicella was a sole trader at the Newbury firm.

The FSA found that Apicella failed to meet the minimum standards required of a mortgage broker by not always completing a fact find document for new customers or taking the time to research their attitude to risk.

During interviews with the FSA, Apicella said of researching a customer’s income, “if a lender doesn’t require it then I don’t ask for it”, and added that for a self-employed customer’s income figure he would “accept it at face value”.

Furthermore, Apicella did not carry out due diligence on a mortgage introducer from whom he subsequently accepted seven mortgage applications. The FSA found all of these applications to contain false and misleading information, therefore making them fraudulent.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. For shame! You missed some of Apicella’s best quotes in the final notice:

    And advisers wonder why they have a bad name…

  2. Nice consistent application of punishments there. Not.
    A £17,500 fine for exposing 224 clients to financial loss yet a ban for 4fraudulent applications and another ban for 9 mortgage applications with false income.
    Apparently 9 applications could lead to undermining confidence in the mortgage market. Really?

    I’m not condoning the actions of these planks, but come on FSA – apply the rules and be consistent in punishments.

  3. Closing the door after the horse has bolted, springs to mind.
    Also, when everyone was telling the FSA that self-cert mortgages were open to abuse, what did they do? If blame has to be taken in these cases, all parties need to acknowledge guilt. The FSA for allowing/approving this type of mortgage, the broker for wondering why the buyer couldn’t prove income, the lender who designed the product and the borrower who accepted the mortgage – no-one is wholly innocent here.

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