Christopher Davies, director of Cornwall-based Newquay Investment Services, was fined £17,500 for not disclosing to the FSA important information about an adviser Davies had employed at Newquay.
The regulator says by not disclosing certain information it led to a risk of customers being recommended unsuitable mortgages.
After Newquay had applied for the adviser to be confirmed as an approved person last year, Davies became aware that the adviser had been suspended by his previous employer because of concerns about his business methods and ethics, including apparently inflating income figures in mortgage applications. Davies raised these concerns with the adviser and concluded that the adviser had lied to him about why he had left his previous employment. Davies then failed to disclose this information to the FSA.
The FSA says that despite being aware of the adviser’s past, Davies failed to exercise control over mortgage applications he was allowed to submit – in particular the FSA says Davies failed to understand the risks associated with fast-track mortgages and as a result allowed the adviser to submit mortgages of this type to lenders.
FSA director of enforcement Margaret Cole says: “When Davies became aware of the later adverse information relating to the adviser he should have immediately informed the FSA. The fine indicates that the FSA takes a serious view of such failings and serves as a deterrent to directors of regulated firms from acting in a similar way.”