David Roberts, sole director of A-Z Mortgages Limited has been fined £14,000 for not having adequate systems and controls in place and not correcting the failings that had been identified by the FSA.
In addition, Roberts was not fully open with the FSA about the business practises at A-Z.
Hygeia Mortgages and Finance Limited has had its permission to undertake regulated activities cancelled by the FSA after it found that it had inadequate capital resources in relation to the regulated activities it had permission to undertake.
Also, Hygeia repeatedly refused to allow the regulator to carry out a supervisory visit and failed to provide information despite several requests.
The FSA’s Small Firms and Contact Division identified a series of failings in systems and controls at A-Z between 28 November 2006 and 31 August 2009.
These included failing to put systems in place to identify mortgage applications containing false or misleading information, failing to make sure that A-Z kept adequate records to explain changes in customers’ circumstances and to show that the advice given by A-Z was suitable, and not adequately monitoring the activities of an adviser putting business through A-Z.
Despite Roberts telling the FSA he would correct the failings that were identified in 2006, the same problems were found to exist in 2009. In addition, during a 2008 treating customers fairly assessment, Roberts described business practises to the FSA that were, in some cases, what he hoped to achieve rather than what happened.
The FSA said it considered 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.
In relation to Hygeia, the FSA concluded that it had failed to ensure that its affairs were conducted soundly and prudently, and in compliance with proper standards.
Tom Spender, the FSA’s head of retail enforcement, said: “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.”
