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FSA censures broker and warns more enforcement cases on the way

Mortgage adviser Leybridge Ltd has become the first victim of the Financial Srvice Authority’s thematic review of advice.

The firm was sanctioned for failing to provide suitable advice, exposing 425 customers to the risk of being mis-sold a mortgage

The regulator says Leybridge failed to ensure that it made and retained adequate records of customers’ personal and financial information in key areas of the business.

Also, widespread record-keeping failures led to the firm being unable to demonstrate the suitability of advice given to customers.

The FSA says the firm also employed inadequate file checking systems whereby sales advisers and mortgage processors would check each file for the existence of requisite documentation, not the standard of its completion.

Directors would then check only a sample of files and did not do so on a regular or adequate basis. There was no adequate system in place for directors to record that files had been reviewed.

The regulator says since Leybridge was unable to pay the proposed fine of £24,000 it waived the penalty so that Leybridge could compensate customers who might have been disadvantaged.

The FSA says this case is the first of several enforcement cases to arise from a thematic project looking into the quality of advice processes in mortgage brokers undertaken by the FSA’s small firms and contact division.

FSA director of enforcement Margaret Cole says: “Leybridge’s record keeping was so poor that they could not demonstrate that the sales of mortgages were suitable and had no way of proving to us that the firm was treating its customers fairly.

We would have imposed a fine of £24,000 but had we done this the firm would not have been able to afford properly to carry out a customer redress exercise. The FSA decided that the priority was to ensure customers received a fair deal and so we waived the fine on this occasion.”


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