Mortgage News
FSA fines director for non-disclosure risk
The FSA has fined the director of a Cornwall-based IFA for not disclosing important information about one of its advisers, resulting in an “unacceptable risk” of customers being recommended unsuitable mortgages.
The regulator fined Christopher Davies, director of Newquay Investment Services (2004) Limited, £17,500 for the offence.
After Newquay had applied to the FSA last year for the adviser to be confirmed as an approved person, Davies became aware that the adviser’s previous employer had suspended the adviser because of concerns about his business methods and ethics including apparently inflating income figures in mortgage applications.
Despite concluding that the adviser had lied to him about why he had left his previous employment, Davies then failed to disclose this significantly adverse information to the FSA.
The regulator deemed that Davies failed to exercise “appropriate control” over mortgage applications submitted by the adviser or consider whether it was appropriate to allow him to continue giving advice on life and other products. The FSA said Davies also failed to understand the risks associated with ‘fast track’ mortgages and as a result allowed the adviser to submit mortgages of this type to lenders.
Margaret Cole, director of enforcement at the FSA, said the failures exposed customers to an unacceptable risk of being recommended mortgages which may not have been suitable for them and exposed lenders to the risk of offering mortgages on the basis of false or misleading information passed through Newquay.
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He explained: “When Davies became aware of the later adverse information relating to the adviser he should have immediately informed the FSA. The fine indicates that the FSA takes a serious view of such failings and serves as a deterrent to directors of regulated firms from acting in a similar way.”
Davies agreed to settle at an early stage of the FSA’s investigation and therefore qualified for a 30% discount under the FSA’s executive settlement procedures. Had Davies not settled at this stage the FSA would have imposed a fine of £25,000.