Lawrence Scoffield Mortgages Limited (LSML) and Council Homebuyers Limited (CHL) have each been fined GBP10,500, while Mortgage Network Solutions (MNS) has been given a public censure.
Jonathan Phelan, head of retail enforcement at the Financial Services Authority (FSA), said: It is essential that firms implement and maintain robust processes to ensure they recommend suitable mortgage contracts and treat their customers fairly. Poor processes of the kind we identified in these mortgage brokers meant there was a risk of unsuitable mortgage contracts being recommended, either because the advisers were not appropriately qualified and supervised or because the assessments of the customers’ needs and circumstances were incomplete or poorly documented.
The failings were discovered during the watchdog’s quality of advice process thematic project, which saw the FSA visit 65 mortgage brokers between June 2006 and October 2006. The watchdog found that both LSML and CHL failed to exercise adequate management and control over their sales processes, while MNS failed to make and retain proper records relating to its customers’ needs and circumstances and to keep adequate records of its training and competence procedures.
The FSA has instructed LSML, CHL and MNS to carry out a past business review. All three firms agreed to settle at an early stage of the FSA’s investigations. As a result, LSML and CHL qualified for a 30% discount. Were it not for this discount, the FSA would have imposed a financial penalty of GBP15,000.
