The Financial Conduct Authority (FCA) named the fraudster as Andrew Barlas of Stewartfield, East Kilbride who was partner of the firm Capital Managers LLP.
Barlas submitted the first online mortgage application through his own firm in November 2006 for a loan of £50,000. He stated his gross income was £42,750, £23,264 higher than his income declared for tax purposes and different to the £24,314 amount in Capital’s accounts.
The second application, sent to a different lender through Capital in 2008, was for a mortgage of £135,000. On this occasion Barlas declared an average gross income over the last three years of £52,000.
The lender’s criteria asked for an average gross income over the last three years or the most recent year if it was lowest. In 2007, Barlas declared gross earnings of £29,287 to HMRC followed by £22,169 the year after. Capial’s accounts showed a different figure to the other salaries declared.
Barlas told the FCA that he had “negligently entered gross income figures” in the mortgage applications but the regulator said that as both lenders had asked for gross income this was not an adequate explanation.
Barlas argued that he would have no reason to intentionally inflate his income because his true income, when added to the joint applicant’s income, would have met the lenders’ criteria. The FCA said that decision was for the lenders to make when presented with the full facts of the case.
Barlas was found in breach of Principle 1, failing to act with honesty and integrity, by knowingly submitting fraudulent applications. In light of this the regulator decided he was not fit to perform regulatory activities.
The FCA felt his actions deserved a penalty of £80,000 but Barlas was able to avoid paying the fine by proving it would cause him financial hardship.
