Thinc and two of its group companies failed to have adequate risk management and compliance systems for its sub-prime mortgage business between January 1, 2006 and September 30, 2007.
The FSA says Thinc failed to take reasonable care to ensure it had records to prove that advice it gave to customers in relation to sub-prime mortgages was suitable.
Between January 1, 2006 and September 30, 2007, the FSA found Thinc and two of its group companies had failed to obtain adequate financial information about some sub-prime mortgage customers before it gave advice, failed to demonstrate those customers’ credit histories merited a sub-prime mortgage and failed to demonstrate why the mortgages recommended matched those customers’ circumstances.
Thinc also failed to evidence that it had considered the affordability of the sub-prime contracts it recommended to those customers the Record of Suitability letter did not correspond to the product.
FSA director of enforcement Margaret Cole says: “This case demonstrates the importance of firms being able to prove to themselves and to the FSA, through proper records, that they are treating their customers fairly by doing everything necessary to make sure that they get suitable advice. The level of fine shows that we are determined to impose higher fines for serious failings in the retail market and that poor record keeping is a serious failing even where, as in this case, the FSA has not determined that the firm mis-sold sub prime mortgages and there have been few complaints.
“The firm’s failings were particularly serious because its conduct could have had an adverse effect on the customers concerned, many of whom were recorded as having adverse credit histories and/or were consolidating debts and the failings continued after a thematic visit to the firm by the FSA in February 2007 because the remedial action implemented by the firm was ineffective and the firm’s sales practices and compliance regime did not improve.”
Thinc Group chief executive John Simmonds says: “We sincerely regret the shortcomings that have been identified with regard to record keeping processes relating to a small number of sub-prime mortgages. We are continuing a comprehensive review of our systems to ensure that these are improved. While I believe that the industry as a whole faces the challenge of raising standards, Thinc is a strong company and is well placed to achieve this.”
The FSA will implement a remedial plan to include appointing an independent third party to review its sub-prime business conducted during the relevant period.