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Mortgage broker overturns £100,000 FSA fine for fraud

FSA Letters 480

A mortgage broker has had a £100,000 FSA fine for mortgage fraud overturned by the Upper Tribunal, although his ban was upheld.

Ambergate Business Services director Raymond Wagner was fined £100,000 in October 2011 for knowingly submitting fraudulent mortgage applications for his own benefit.

Wagner challenged the fine, but not the ban, over the assertion he had acted deliberately and the power of the FSA to impose a financial penalty.

In its initial judgement the FSA said Wagner submitted four fraudulent mortgage applications for himself, which contained inaccurate and misleading information, including an inflated salary.

It also accused Wagner of failing to properly supervise two of the firm’s mortgage advisers, Neeraj Harish and Richard Fairley, resulting in both individuals submitting mortgage applications for themselves that contained false income details.

The regulator found Harish and Fairley were not fit to work in regulated financial services and both have been prohibited from carrying out any regulated activities.

The Upper Tribunal held that the FSA had the appropriate authority to impose fines for mortgage fraud prior to 2008 when it changed policy.

Before 2008 the FSA did not impose fines as it was quicker to ban individuals without them and mostly involved sole traders. But it decided the lack of fines did not offer a “credible deterrent” and threatened a £100,000 fine or more to fraudsters.

At the Tribunal the FSA accepted he had acted “recklessly” by submitting false and misleading details of his own income to a lender but had not made a deliberate attempt at fraud.

It states: “His conduct was not deliberate and he did not deliberately mislead the lender. Wagner had failed to check the income details on the residential mortgage application or at all; by disregarding the importance of this information and failing to consider the risks that the application was fraudulent his conduct was reckless”

Money Marketing first raised concerns about Ambergate Business Services in May 2010. Buy-to-let investors facing huge losses claimed a panel surveyor used by their lenders overvalued their properties, in some cases by almost double.

Ambergate Business Services went into administration in July 2009.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Looks like the FSA’s lawyers don’t even understand the concept of ‘mens rea’ and fraud. What a bunch of bumbling incompetents.

  2. RegulatorSaurusRex 19th October 2012 at 11:23 pm

    How did the applicants get away with it?

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