Thinc was last week fined £900,000 for failing to have adequate risk management and compliance systems for its sub-prime mortgage business.
The FSA says that while it did not find any evidence that Thinc missold sub-prime mortgages, the firm did not have records to prove that the advice it gave to customers was suitable.
Joseph says if the fine is not allowed to be used to pay any compensation claims, then it is simply a £900,000 windfall for the FSA.
He says: “The FSA has become a money-making machine driven by the necessity to issue fines in order to pay its way. Where does that money disappear to? No one was fined at the FSA for the Northern Rock debacle and they all managed to get their bonuses. I wonder if Thinc knows that they are actually paying those bonuses.”
But an FSA spokesman says the money will not be put into a compensation pot.
He says: “The money that we collect from fines is collated and is used to reduce fees for firms in the next year. It is not kept for us.”
The spokesman confirmed that Thinc would be expec-ted to pay compensation on top of the fine if complaints arise. He says: “Of course that would be the case. The fine is a separate matter.”
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