Sole trader Gurpreet Singh Chadda was fined £945,277 by the regulator and banned from working in the financial services industry.
The FCA found him guilty of significant failings when conducting sale and rent back agreements.
Birmingham-based Chadda was trading under the names Red2Black Homes and B&L Homes.
The FCA investigated his involvement in seven sale and rent back transactions between June 2009 and January 2010 and found serious failings in all of them.
A sale and rent back transaction is an agreement where a home owner sells their home and then rents it back from the arranger so as to be able to carry on living in the property.
Chadda’s widespread failings included:
– misleading the sellers of the properties, who were his customers, by telling them he would be buying their homes when in fact the purchasers were other people
– failing to notify the sellers that these purchasers were not authorised or regulated by the FCA, which meant they were not covered by the regulatory protections
– helping the purchasers to obtain mortgages in the knowledge that they were giving misleading information to mortgage lenders;
falsely claiming that the price the sellers would get for their properties would be based on an independent valuation
– misleading the sellers about what their properties were worth; and charging the sellers grossly unfair and excessive hidden fees
In a statement the FCA said that Chadda had seriously aggravated his original misconduct by making false and misleading statements, failing to disclose relevant documents and information and creating misleading documents. He also arranged for people to impersonate his customers in order to mislead the FCA.
FCA director of enforcement and financial crime Tracey McDermott, said: “Chadda’s misconduct is the most shocking we have seen from a home finance arranger. He is a disgrace to financial services. He deliberately misled his clients for his own personal gain and then repeatedly and cynically lied to the FCA.
“Chadda is not fit to work in regulated financial services and he presents a serious risk to customers and lenders alike with his dishonest and unscrupulous actions. The unprecedented level of the fine for a sole trader reflects our determination to deprive him of the gains he made as a result of his misconduct.”
