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Mortgage firm fined £14k for systems and controls failings

The FSA has fined a mortgage firm director £14,000 for failing to put in place adequate systems and controls, and separately has cancelled the regulatory permissions of a mortgage brokerage for refusing to allow the FSA to carry out a supervisory visit.

A-Z Mortgages sole director David Roberts was fined £14,000 after not addressing systems and controls failures identified by the FSA in 2006.

Between November 28, 2006 and August 31, 2009 Roberts failed to put adequate systems and controls in place to identify mortgage applications containing false or misleading information.

He also failed to make sure that A-Z kept adequate records to explain changes in customers’ circumstances and to show that the advice and product recommendations made by A-Z were suitable, and failed to adequately monitor the activities of an adviser putting business through A-Z.

Roberts told the FSA that he would correct failings that were identified by the FSA in 2006, but many of the same failings were identified again in 2009.

The FSA says he also failed to be fully open with the regulator during a treating customers fairly assessment in 2008, describing business practices that Roberts hoped to achieve rather than what actually happened in practice.

The FSA considers that Roberts’ misconduct is particularly serious as it meant that customers were at risk of receiving unsuitable advice and, for a period of time, A-Z was at risk of being used for financial crime.

The regulator has also cancelled the permission to undertake regulated activities for Hygeia Mortgages and Finance.

Hygeia failed to satisfy threshold conditions, as the FSA found that Hygeia had inadequate capital resources in relation to its regulated permission.

Hygeia also failed to co-operate by repeatedly refusing to allow the FSA to carry out a supervisory visit, and did not provide information to the FSA, despite repeated requests. 

The FSA concluded that Hygeia had failed to ensure that its affairs are conducted soundly and prudently, and in compliance with proper standards. 

Head of retail enforcement Tom Spender says:“Authorised firms are obliged to deal with the FSA in an open and co-operative way. 

“David Roberts failed to ensure that the correct systems and controls were in place, even though we had highlighted where improvements needed to be made. He failed to be fully open with us about the actual business practices at A-Z Mortgages, often talking aspirationally rather than realistically.

“Hygeia repeatedly refused to co-operate with the FSA, failing to provide information requested by the FSA and refusing to allow the FSA to carry out a supervisory visit. Failure to accommodate a supervisory visit and provide information to the FSA is unacceptable behaviour for any authorised firm.  The FSA will not tolerate such behaviour and has taken action to cancel the permission of Hygeia as a result.

“These actions demonstrate what will happen if firms are not open and co-operative with the FSA.”

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  1. ayoola rasaq akanni 27th September 2010 at 9:03 pm

    thank you very mech

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