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Loan broker rebuked for failing customers

The FSA has publicly reprimanded a mortgage broker for failing customers.

In the first such disciplinary case against a senior manager of a mortgage and general insurance broker, the regulator found Essential Mortgages Limited chief executive Steven Leslie Davis to have “fallen well below acceptable standards in the way that he carried out his duties as a director of his firm” in a published statement of misconduct.

EML, which ceased trading last year, left at least 350 customers without accident, sickness and unemployment cover because it failed to pass on insurance premiums to insurers because of “inadequate systems and resources”.

Davis has not been fined, so his creditors can get as much redress as possible.

But compliance consultant Adam Samuel argues that the FSA is acting beyond its powers in the case.

He says because the failings surround ASU and because Davis was a regulated mortgage broker who ceased trading a week before GI was regulated in January 2005, the FSA is acting outside its powers.

Samuel says: “He does not appear to have broken any statement of principle, at least in relation to the ASU policies because the principles did not apply to his business until it ceased trading.”

FSA spokeswoman Sam Bennett says: “We believe we acted within our jurisdiction. The main thing is that Davis had overall senior management responsibility to oversee the entire business.”


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