You are here: Home - News -

Mortgage firm boss fined for transacting business without PI insurance

  • 28/07/2021
  • 0
Mortgage firm boss fined for transacting business without PI insurance
A mortgage company director has been fined £25,000 by the regulator after his firm transacted mortgage business without professional indemnity insurance (PII).


The Financial Conduct Authority (FCA) also withdrew approval from Markos Markou to perform the functions of director or chief executive at his firm Financial Services Euro (FSE).

Further, it prohibited him from performing any function in relation to any regulated activity by an authorised person, exempt person or exempt professional firm.

The regulator found Markou not to have had appropriate oversight of FSE’s mortgage business between 24 November 2015 and 14 October 2017, and said he failed to stop the firm from carrying out mortgage transactions while he was aware it was uninsured between July and October of that year.

During the period, FSE’s mortgage advisers were self-employed and generated mortgage business primarily through word-of-mouth in their local communities. 

The regulator said his conduct put the firm at risk of being used as a vehicle for financial crime and did not protect the interests of clients. 

The regulator said it considered Markou to be not a “fit and proper” person. 

Markou has minimal training in financial services and does not hold the CeMAP qualification. He is the director of 14 other companies in the UK, some of which operate from the same premises as FSE.  

His professional experience is mainly within the provision of legal and dispute resolution services.  

The regulator said Markou ought to have ensured the business did not advise on mortgages without insurance in place and that it did not revert to non-compliant practices previously raised. 

Markou has the right to appeal the decision with 28 days of the notice. 

The regulator said: “Following interventions by the FCA between 2011 and 2015, Mr Markou was fully aware of the serious risks that this conduct created. By ignoring the risks, the FCA believes that Mr Markou acted recklessly and demonstrated a lack of integrity. 

“Mr Markou has referred the decision notice to the Upper Tribunal where he and the FCA will each present their cases. The Tribunal will then determine what, if any, is the appropriate action for the FCA to take, and will remit the matter to the FCA with such direction as the Tribunal considers appropriate for giving effect to its determination.” 

It added: “At this stage, the facts and matters stated in the decision notice therefore reflect the FCA’s belief as to what occurred and how Mr Markou’s behaviour is to be characterised.” 


Previous concerns 

The FCA’s concerns with the firm date back to 2011. 

The regulator visited FSE in February of that year in relation to its financial crime systems and controls. An investigation into the firm was opened following the visit.

In December 2011, FSE was prevented from carrying out mortgage business unless applications were reviewed by an independent compliance consultant. 

In 2014, Markou admitted he did not comply with the restrictions imposed in 2011 and agreed not to submit applications unless they were independently reviewed. 

The restriction was lifted later that year on the basis that an external compliance consultant found no regulatory failings within the applications. 

A review was then carried out in 2015, in relation to FSE’s financial crime systems and controls and regulated activities. 

It found the firm was not compliant with mortgage conduct of business (MCOB) regulation. It also raised concerns over the plausibility of client income and employment details declared on some mortgage files. 

The regulator found this put FSE at risk of being used for financial crime. The firm was again required to run applications by an external compliance consultant. 

A further review in the same year found clients were receiving adequate advice and the requirement to have applications independently reviewed was lifted.

In 2016, FSE was removed from a lender’s panel after Markou refused to allow the lender’s monitoring team to visit the firm, which was in breach of the panel’s terms and conditions. 

The visit was over concerns of potentially false documentation and unverified payslips. 

In 2017, another lender removed the firm from its panel after it suspected mortgage fraud was taking place. This was because the income of applicants from at least 48 applications either reduced or stopped shortly after completion. 

Markou did not inform the regulator that it had been removed from these panels.

The FCA visited the firm after it received information from the lenders and two days later, FSE’s PII cover lapsed and was not renewed.

An investigation was subsequently launched in 2018.

There are 0 Comment(s)

You may also be interested in