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Mortgage broker hit by FSA disciplinary action

The Financial Services Authority has today publicly reprimanded a mortgage broker and published a ‘statement of misconduct’ for failing customers.

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

Davis, chief executive and director of accounts and finance functions at Essential Mortgages Limited, failed to ensure there were adequate systems and resources for processing, accounting for and monitoring customers’ applications in respect of payments for accident sickness and unemployment insurance policies.

At least 350 customers’ ASU policies, worth £500,000, were not placed on risk because EML, which ceased trading on January 6 2005, failed to pass on their insurance premiums as a direct result of its inadequate systems and resources. This left clients without any cover.

David has not been fined so his creditors receive as much redress as possible.

FSA head of retail enforcement Jonathan Phelan says: “Senior managers of authorised firms should take note that the FSA will hold them to account where they fail to act appropriately when carrying out their regulatory responsibilities.

“The failures in this firm could have been avoided if the director had taken reasonable care to organise and control the accounting functions of the business. This case is very serious because customers who placed their trust in the firm to put in place their insurance policies were exposed to considerable risk.”


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