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FSA in loan crackdown

The FSA is cracking down on unauthorised brokers who arrange and advise on mortgages illegally.

It is using its perimeter project team of 30 which includes supervisory and enforcement staff in a clampdown on trading by firms which have not gone through the authorisation process since the regulatory regime came in on October 31.

A pilot scheme in Edinburgh and Glasgow included over 100 visits to targeted firms. The list of firms being contacted on a nationwide basis is based on a number of sources, including the FSA’s database of firms that registered or applied for auth- orisation but then withdrew. The regulator is also reacting to leads from the public and the industry.

The FSA says it is not aiming to put firms out of business. If breaches are inadvertent or result from genuine misunderstandings, options for the firm will include getting proper authorisation. But the FSA warns that in order for it to protect consumers it has the option of choosing not to authorise firms that have wilfully breached the Financial Services and Markets Act. The regulator says it ultimately has the power to take criminal proceedings if necessary although industry sources think this is unlikely.

FSA managing director Clive Briault says: “Track-ing down firms operating outside our regime is a major priority for the FSA. By cleaning up the industry, we are making a level playing field for legitimate authorised firms.

“Unregulated mortgage brokers should act now and decide to get in the regime or stop that side of their business.”

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