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FSA fines mortgage firm for re-mortgage and PPI failings

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

The company and Hayes have been ordered to pay £133,000 and £49,000 respectively for inadequate systems and controls when recommending re-mortgages and PPI to customers.

The FSA found, during the second phase of its PPI investigation in May 2006, that Hadenglen sold approximately 2,000 re-mortgage and 1,900 PPI customers unsuitable products, exposing them to unacceptably high risk.

This is the first time the FSA has fined both a firm and its chief executive for re-mortgage and PPI failings.

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

FSA Director of Enforcement Margaret Cole says firms must develop and maintain systems and controls that minimise the risk of providing unsuitable advice to customers.

She 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 imposed on both Hadenglen and Mr Hayes reflect the seriousness of their actions.”

Hayes has implemented a comprehensive review of systems and controls and retained external consultants to advise on this process. Hadenglen has implemented a remedial action plan for consumers which involves a customer contact exercise and redress where appropriate.

The FSA says without this action the fines would have been significantly higher.

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