View more on these topics

FSA fines two firms and bans a third for sub-prime failings

The FSA has fined two mortgage firms and banned a third for sub-prime failings, following its investigations into the sector.

The FSA has fined The Loan Company trading as Greenhill Finance £31,500 and Next Generation Mortgages Limited £10,500.

It has also stopped Homebuyer Securities Limited from trading.

The FSA says that both TLC and NGM failed to correct record keeping failings identified during FSA visits in 2005. They also did not gather adequate customer information to assess affordability or support the mortgage recommendations made.

TLC did not adequately train its staff, failed to monitor or review client files properly and gave customers inconsistent information about the key features of the product.

NGM could not demonstrate why recommendations were made and it failed to explain the details or risks of recommended mortgages to customers.

Meanwhile, banned broker HSL did not ensure that all of its advisers were qualified to give mortgage advice.

NGM has agreed to stop selling self-certification mortgages, which require verification of income by lenders, due to FSA concerns and HSL has agreed that its director will never work as a mortgage broker again.

All three firms have been required to conduct a past business review to identify whether customers have suffered losses as a result of receiving unsuitable advice.

FSA Director of Enforcement Margaret Cole says: “Firms who do not comply with FSA standards taint the entire mortgage industry which is totally unacceptable. Any firms who place their customers at risk of receiving unsuitable advice through inadequate business processes can expect strong action from the FSA. Firms must ensure they have appropriate systems to protect their customers.

“There are a number of actions we can take against firms and individuals which includes fines, public censures or stopping firms and/or individuals from doing business. In addition to these penalties we can also instruct a firm to conduct a detailed and lengthy review of their clients’ files. This will establish if any customers are owed redress and could cost firms many thousands of pounds.”

TLC and NGM agreed to settle at the first stage of the FSA’s investigation therefore qualifying for a 30 per cent discount. Were it not for this discount their fines would have been £45,000 and £15,000.

The failings at TLC occurred during June 2005 to November 2006, between June 2005 and January 2007 at NGM and between October 2004 and February 2007 at HSL.


Truth and consequences

Tom Baigrie recently addressed the Cicero Forum on the problems within the financial services industry and supplied the most succinct and biting condemnation yet of the futility and madness of the RDR proposals.

Struggle for satellite packagers

Personal Touch Packaging managing director Rob Jupp believes lenders should not be criticised for cutting satellite packagers out of their distribution channel.Speaking at the Mortgage Business Expo, Jupp said he does not see a future for satellite packagers and considers that franchise partners are a much better solution. Satellite packagers repackage products for other firms.But […]

Northern Rock receives further proposals below market price

Northern Rock has issued a statement saying that it has received additional indicative expressions of interest covering a range of options for the business.It says one of whice does contemplate an offer for the lender materially below the market price at the close of business on Tuesday 20 November.Northern Rock says its advisors have begun […]

And then there were non

The RDR may hasten the retreat of advisers from the mass market


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm