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FSA fines mortgage firm and chief over selling failures

The FSA has fined Hadenglen Home Finance and its chief executive Richard Hayes for failures in selling payment protection insurance and remortgages.

The firm, based in Ashby de la Zouch, Leicestershire, has been fined 133,000 and Hayes has been ordered to pay 49,000 over inadequate systems and controls when recommending remortgages and PPI to clients.

This is the first time the regulator has fined both a firm and its chief executive for remortgage and PPI misselling.

The FSA found, during the second phase of its PPI investigation in May 2006, that the firm exposed around 2,000 remortgage and 1,900 PPI customers to an unacceptably high risk of being sold unsuitable products.

The FSA says Hadenglen did not gather sufficient information from customers and did not take into account the cost of PPI when making a recommendation. Hayes failed to ensure sales practices for PPI were adequate.

FSA director of enforcement Margaret Cole says: “The penalty imposed on Mr Hayes should leave senior management within firms in no doubt that the FSA will hold them to account if they fail to treat their customers fairly. The significant fines reflect the seriousness of their actions.”

Hayes has implemented a review of systems and controls under advice from external consultants. The firm has also implemented remedial action including redress where appropriate. The FSA says the fines would have been significantly higher without this action.

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