Jan/100
Bristol’s rogue mortgage brokers fined
Rogue mortgage brokers are being unmasked by the City watchdog as the slump reveals the sins of the property boom. The number of brokers being targeted by the City watchdog has rocketed over the past three years and the flow of fines for mis-selling and malpractice is expected to continue.
So far in 2008, more than £20.5 million worth of fines has been dished out by the Financial Services Authority (FSA) of which over £1.5 million have been slapped on some 15 mortgage brokers who have been found guilty of misconduct.
The reasons cited for the brokers’ fines have ranged from giving ‘unsuitable advice’ to ’submitting false mortgage applications’ to even ‘lacking competence and capability’.
The selling of mortgage products only came under the watchdog’s eye four years ago in October 2004.
Jan/100
Mortgage brokers fined £17,500
A NOTTINGHAM mortgage broking firm has been fined £17,500 because it failed to provide suitable advice.
Gillen Farrelly Independent Advisers Limited exposed more than 80 customers to the risk of being sold an unsuitable self-certified mortgage, say the Financial Services Authority (FSA). The FSA said that between January 2006 and April 2008 the Forest Fields firm failed to make appropriate inquiries about customers’ income, expenditure, credit history and debt position.
The authority also said the company failed to carry out straightforward checks that increased the risk of being used by third parties to commit financial crime.
The company no longer sells self certification mortgages and agreed to settle at an early stage of the FSA’s investigation, so qualified for a 30% reduction in penalty.
The company refused to comment when contacted by the Evening Post.
Jan/101
Mortgage lender fined over reposession policy
One of the UK’s biggest specialist mortgage lenders has been ordered to pay a record £10.5 million for treating struggling borrowers unfairly and being too ‘trigger-happy’ with repossessions.
GMAC-RFC, which was a top 10 lender before the credit crunch hit, has been fined £2.8 million by the Financial Services Authority (FSA) and ordered to pay over redress of £7.7 million plus interest to more than 46,000 mortgage customers.
An investigation found that the specialist lender, which mainly dealt with sub-prime, buy-to-let and self-cert mortgages, hit struggling borrowers with “excessive and unfair” charges. It was also found to have launched repossession proceedings before “fully considering the alternatives”. This is the first time a lender has been fined over the way it treats borrowers struggling with payments. Complaints about arrears handling increased 41% to 39,181 in the first six months of 2009, according to the FSA.
The fine follows the FSA publishing its mortgage market review, in which it proposed tougher affordability checks and the end of self-cert mortgages. Margaret Cole, director of enforcement and financial crime at the FSA, says GMAC-RFC’s fine should act as a deterrent to other lenders. In a written statement, the lender has apologised to affected customers.
It says: “While our arrears charges were in line with the market, in hindsight we fully accept that for certain fees our estimates of the costs were not proportionate to the additional administration actually required.”
What affected customers should do:
Over 46,000 GMAC-RFC mortgage customers could now be due redress from a compensation pot of up to £7.7 million plus interest. This applies to customers who were hit with specific arrears charges between 31 October 2004 and 30 November 2008.
Specifically, the FSA fine and redress order relates to:
* Excessive and unfair charges for customers
* Proposed repayment plans that did not always consider customers’ circumstances
* Repossession proceedings that were issued without all the alternatives being fully considered. GMAC-RFC’s staff were also found to have insufficient training in how to deal with arrears cases.
Customers who were hit with arrears charges for failing to pay their monthly mortgage payment by direct debit are set to receive an average refund of £117.
Borrowers who paid early repayment charges applied to arrears fees and charges could get an average refund of £14. And average refunds of £45 could be available in cases where the solicitor’s instruction fee their paid was more than the actual cost.
GMAC-RFC has already set up a redress system, and says it will write to all affected customers with more details.
Following this, existing customers of GMAC-RFC will receive an automatic re-crediting of the charges plus interest to their mortgage account.
Past customers, who have now redeemed their mortgages with GMAC-RFC, should also receive a letter. This will, however, be sent to their last known address.
Jan/100
Ex-mortgage broker fined £100,000
A former mortgage broker who ran an office in Chester was yesterday fined £100,000 by a financial watchdog.
The Financial Services Authority (FSA) has banned Stephen Jones and hit him with the massive fine – the second largest ever – after finding he had exposed about 1,500 customers to the risk of receiving unsuitable advice.
The FSA has also fined junior partner Simon Poole, who ran the partnership’s office in Chester, £7,000 for exposing 750 clients to the risk of purchasing unsuitable mortgages.
Mr Jones, senior partner of Jones & Poole Independent Mortgage Specialists, failed to control his business effectively or to make sure that it met regulatory requirements, and did not treat customers fairly when recommending mortgage contracts, alleged the FSA.
But Mr Jones told the Daily Post he rejected the allegations of dishonesty and fraud, and was seeking legal advice with a view to challenging the FSA’s ruling.
The partnership was formed in 2001/02 and became authorised to carry on regulated activities in relation to regulated mortgage contracts on October 31, 2004.
It traded from Edinburgh House, Clwyd Street, Rhyl, and from the Chester office. The FSA has removed the partner- ship’s authorisation, but Mr Poole has obtained new authorisation to carry on as a sole trader.
The FSA said the £100,000 fine was the second biggest imposed on a mortgage broker since it took over mortgage regulation nearly four years ago. It alleged that, before a visit from FSA staff, Mr Jones arranged for customers to sign and backdate retrospective documents for completed sales so that it would appear he had created contemporaneous sales documents. He also provided a lender with false income information to support his own mortgage application. Mr Poole was fined for failing to record whether he had assessed clients’ ability to afford a mort- gage. He also failed to implement changes recommended by a compliance consultant.
The partnership operated in practice as two separate businesses with each partner responsible for his own clients, sales and compliance arrangements and with the two partners having only very limited contact with each other.
Jonathan Phelan, the FSA’s head of retail enforcement, said: “Mr Jones and Mr Poole exposed more than 2,000 of the partnership’s customers to the risk of receiving unsuitable advice and losing money.
“Mr Jones’s fraudulent mortgage application and his dishonesty in attempting to cover up regulatory failings were completely unacceptable warranting a ban and a large financial penalty.
“Mr Poole’s failings were of a lesser order and although they were deserving of a fine he has not been banned.”
Mr Phelan added: “It was in effect a dysfunctional partnership. It is important that partnerships which carry on regulated financial services business are organised so they can be controlled as a single business with clear lines of responsibility and accountability.”
Mr Poole 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 procedure. Otherwise he would have paid £10,000.
But Mr Jones said he had not heard from the FSA since its enquiries last year and yesterday’s news of the £100,000 fine had come as a complete shock.
He said: “I will be taking legal advice on this because the FSA has implied dishonesty and fraud.”
Jan/100
Mortgage brokers fined
The Financial Services Authority (FSA) has taken action against three mortgage brokers that may have resulted in clients taking out home loans that were not suitable for them. Lawrence Scoffield Mortgages of Ripon and Council Homebuyers (Midlands and North) have both been fined £10,500 each by the financial services watchdog.
The FSA said that neither firm exercised adequate management and control over their sales processes. The watchdog also publicly censured another firm, Mortgage Network Solutions of Manchester, which had failed to make and retain proper records concerning the needs and circumstances of customers, and which had also failed to maintain adequate records of its procedures for training and competence.
Jonathan Phelan is head of retail enforcement at the FSA; he said: “It is essential that firms implement and maintain robust processes to ensure they recommend suitable mortgage contracts and treat their customers fairly. Poor processes of the kind we identified in these mortgage brokers meant there was a risk of unsuitable mortgage contracts being recommended, either because the advisers were not appropriately qualified and supervised or because the assessments of the customers’ needs and circumstances were incomplete or poorly documented.”
Work carried out by the FSA in 2006 on the quality of mortgage advice unveiled the problems. Firms of various sizes totalling 252 were looked at, with 78 being visited and mystery shopping undertaken at 99. Things looked at were the way advisers considered the needs of customers, how their ability to afford a loan was assessed, and the quality of recommendations. The FSA also monitored after-sales care and the level of management controls that were in place. In general terms the watchdog found that there was room for improvement among firms in all steps of the advice process.
The three firms against whom action was taken will have to review all past business. All three firms agreed to settle at an early stage, otherwise the two firms that were fined would have ended up with a fine of £15,000.
Jan/100
Broker banned and fined by regulator
Over recent years mortgage fraud has become a big problem in the UK as well as in other countries and the UK’s financial regulator, the Financial Services Authority, has been clamping down on this sort of activity through taking various measures including hefty fines and bans for those industry officials that are found to be involved in mortgage related fraud.
The regulator has recently banned one mortgage broker and handed down a hefty fine for engaging in mortgage related fraud. The London broker, Grace Nmadibechi Ada Ukala, has been banned from operating by the FSA and has been fined an enormous £70,000 for her part in the submission of misleading and false mortgage applications.
The broker was the director of Goldsparkle Consulting Services Limited and had been approved by the FSA. According to reports she submitted five mortgage applications for herself, but put in dishonest information about income and employment. The broker was also found to have hidden information about the firm’s finances from HM Revenue and Customs. The fine could have been for much more, but as she opted to settle early it was reduced.
An FSA official said: “This fine, which would have been £100,000 had Ukala not settled early, is aimed at deterring approved persons from getting involved in mortgage fraud. Her earnings, as stated in the mortgage applications, were considerably higher than the income she declared to HMRC. By knowingly submitting false and misleading mortgage applications, Ukala acted in a totally unacceptable fashion.”
She added: “Our work on mortgage fraud continues as a priority in our campaign against financial crime. We have banned more than 60 mortgage brokers over the last three years and we will continue to ban such people to reinforce the message that knowingly giving false and misleading information is dishonest and poses a serious risk to prospective lenders. We will continue to ban individuals who demonstrate a lack of integrity.”
Jan/100
Broker banned and fined by regulator
Over recent years mortgage fraud has become a big problem in the UK as well as in other countries and the UK’s financial regulator, the Financial Services Authority, has been clamping down on this sort of activity through taking various measures including hefty fines and bans for those industry officials that are found to be involved in mortgage related fraud.
The regulator has recently banned one mortgage broker and handed down a hefty fine for engaging in mortgage related fraud. The London broker, Grace Nmadibechi Ada Ukala, has been banned from operating by the FSA and has been fined an enormous £70,000 for her part in the submission of misleading and false mortgage applications.
The broker was the director of Goldsparkle Consulting Services Limited and had been approved by the FSA. According to reports she submitted five mortgage applications for herself, but put in dishonest information about income and employment. The broker was also found to have hidden information about the firm’s finances from HM Revenue and Customs. The fine could have been for much more, but as she opted to settle early it was reduced.
An FSA official said: “This fine, which would have been £100,000 had Ukala not settled early, is aimed at deterring approved persons from getting involved in mortgage fraud. Her earnings, as stated in the mortgage applications, were considerably higher than the income she declared to HMRC. By knowingly submitting false and misleading mortgage applications, Ukala acted in a totally unacceptable fashion.”
She added: “Our work on mortgage fraud continues as a priority in our campaign against financial crime. We have banned more than 60 mortgage brokers over the last three years and we will continue to ban such people to reinforce the message that knowingly giving false and misleading information is dishonest and poses a serious risk to prospective lenders. We will continue to ban individuals who demonstrate a lack of integrity.”
Jan/100
So how do you go about making a claim?
Recently several struggling home owners have made successful claims against their lender or broker after they were able to prove that their mortgage was mis-sold to them. In each of the instances they have been able to reclaim the money that they were in arrears by and additional costs, as they were able to prove that they should not have been advised to take out the mortgage in the first instance.
Identifying that a mortgage has been mis-sold can be difficult, but the successful home owners so far have been able to prove in each of the incidents that the advice offered to them was proven not to have been “suitable for that consumer”, and records were not made or retained – and this breaks FSA rules.
In the last financial year alone the FOS received more than 7,000 mortgage complaints from consumers (excluding mortgage endowment complaints), and currently upholds 41% of all mortgage complaints.
Stephen Dargavel, director of Badlender.co.uk said: “The justice that some recent home owners have gained by challenging their lenders and brokers should serve as a warning sign. It should also act as a beacon of hope for those who genuinely believe that they may have been mis-sold a mortgage. There is something that can be done, and people do not need to suffer in silence.”
However, taking cases to a broker/lender or the FOS can be a complicated process, and consumers will need all relevant documentation to support any mis-selling complaint that they want to put forward.
Jan/100
Were you mis-sold your mortgage?
As many as 371,000 home owners say they were given bad advice or mis-sold their mortgage – and many may have a claim against their lender or broker.
Under FSA rules if the advice given breached the rulebook for mortgage advisers – “Mortgage and Home Finance: Conduct of Business” then borrowers struggling to pay their mortgage could take their case to the Financial Ombudsman Service (FOS).
According to mortgage claims referral service badlender.co.uk, 161,500 home owners don’t think they had the right advice from their lender or broker when taking out their mortgage, and 209,500 home owners think that they may have been mis-sold their mortgage.
Jan/100
Mortgage mis-selling claims set to rise, says new firm
More than 371,000 home owners believe they may have been given poor advice or been mis-sold their mortgage after purchasing property or remortgaging during the property boom. This is according to research undertaken by Opinium Research on behalf of new mortgage claims management firm badlender.com.
This figure breaks down to 161,500 home owners who don’t think they had the right advice from their lender or broker when taking out their mortgage, and 209,500 home owners think they may have even been mis-sold their mortgage.
In the last financial year the Financial Ombudsman Service has received more than 7,000 mortgage complaints from consumers (excluding mortgage endowment complaints), and currently upholds 41% of all mortgage complaints.
Badlender.co.uk forecasts that the number of home owners struggling with repayments could still rise, and more home owners could come forward with cases of mis-selling against their broker or lender.
Stephen Dargavel, Director of Badlender.co.uk, believes more home owners could come forward with cases of mis-selling. He said: “Whilst there are many reputable and long standing brokers and lenders in the mortgage market, we believe there have been some who are responsible for mis-selling mortgages to home owners during the ‘boom’ of the property years.”
Taking cases to a broker/lender or the Financial Ombudsman Service can be a complicated process, and consumers will need all relevant documentation to support any mis-selling complaint that they want to put forward.
Badlender.co.uk has developed a questionnaire consisting of 106 questions that will help consumers identify if their mortgage was mis-sold to them. If cases are identified as potentially successful, home owners are offered the services of legal 500 law firm property specialists Grange Wintringham, who will help them to pursue a complaint against their broker or lender.
Consumers will be charged a nominal £40 fee to complete the questionnaire, and 15% of the final settlement will be deducted to cover legal costs. Consumers can also appoint their own solicitors or lodge a complaint themselves.
Dargavel concluded: “We are currently representing consumers who are heavily in arrears, because the mortgage that they were advised to take out was simply too big for them to handle, and meet the monthly repayments. Default charges can be levied on home owners anywhere between £25 and £115, adding even greater financial strain.”
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