Small firms - Mortgages

 

One mortgage adviser has been jailed and another hit with a £129,000 fine as part of a set of recent investigations and court cases in the last month on brokers found committing fraud or financial irregularities.

The fines and bans demonstrate the FSA will not hesitate to use its regulatory powers where we find instances where mortgage brokers are unwilling or unable to maintain the standards we require.

The three and a half year imprisonment was given to Gordon Benville, an independent financial adviser who traded as Kingsfield in Deal, Kent.

He appeared at Canterbury Crown Court on Friday (11 July) for sentencing after pleading guilty to 16 offences on 11 June.

Twelve of the offences he pleaded guilty to relate to obtaining a money transfer by deception (totalling £440,637) and four were fraud offences.

He was suspended by the FSA in October 2007 and his assets frozen.

All of the offences Benville pleaded guilty to surrounded activities he carried out as a mortgage broker or financial adviser.

Sadia Nasir

She was banned and fined £129,000 for being involved in numerous fraudulent mortgage applications. This is the first time the FSA has both banned and fined a mortgage broker for mortgage fraud.

Nasir was an FSA approved person and the director of a firm based in Ilford called London Mortgage and Financial Services Limited. The firm traded as House of Finance.

The FSA found that Nasir:

  • submitted seven mortgage applications containing false information about her own employment and earnings supported by falsified documents
  • in four instances entered her own bank details on mortgage applications for clients
  • deliberately withheld sections of an application form from FSA investigators, failed to disclose to the FSA information relating to a County Court Judgment made against her in September 2005 and failed to disclose the true extent of her assets in an authorisation application to the FSA.

Robin Knox

This North East based mortgage broker was banned and fined after he exposed about 500 of his firm’s customers to the risk of receiving unsuitable advice.

Knox, Managing Director of Mortgage and Property Services Limited (MPSL), was banned for lacking competence and capability and for failing to ensure his firm had proper systems and controls in place for the nature of the business it conducted.

The FSA fined Knox £17,500 for failing to organise the firm’s affairs effectively and responsibly and failing to ensure the firm met required standards in recommending mortgage contracts.

Were it not for Mr Knox’s current personal financial difficulties, the FSA would have sought to impose a more significant financial penalty on him as well as a financial penalty of £60,000 on MPSL.

The trading permission of MPSL has also been withdrawn

Ian Sanderson and Mortgage Master

Mortgage Master was fined £11,900 for failing to adequately supervise an adviser, resulting in applications containing false and misleading information being submitted to lenders.

The adviser, Ian Sanderson, was banned from the industry for deliberately entering false information on mortgage applications Mortgage Master (Glasgow) Limited, must review all of Sanderson's mortgage files and inform all lenders and clients of cases where false information has been included in mortgage applications.

The FSA took into account the firm's mitigating actions. It co-operated fully with the FSA's investigation and terminated Sanderson's employment with the firm. It also took advice from its third party compliance consultant and improved its systems and controls.

The firm agreed to settle at an early stage of the enforcement proceedings and thereby qualified for a 30% reduction in penalty pursuant to the FSA's executive settlement procedures. Were it not for this reduction the FSA would have imposed a financial penalty of £17,000 on the firm.

Muhammad Adnan Ashraf, Muhammad Asim Iqbal and Mohammed Atif Mayo

Three East London brokers were banned for submitting false mortgage applications to lenders backed by false or misleading documents.

The brokers are Muhammad Adnan Ashraf and Muhammad Asim Iqbal, directors of OCS Property and Financial Services Limited (OCS) of Barking, and Mohammed Atif Mayo, a director of Mac & Mayo Property Services Limited of Forest Gate.

The FSA found that:

  • Ashraf submitted a mortgage application in his own name that contained false income details and was supported by a copy of a fake driving licence
  • mortgage applications submitted by Iqbal to lenders were based on false information - nine sets of applicants’ accounts used in support of customers’ mortgage applications contained identical figures, despite the accounts being for different types of business and apparently being prepared by three different accountants.  Iqbal also gave the FSA false and misleading information about the nature of sales undertaken by OCS and the number of accounts that OCS sent to lenders
  • Mayo submitted to a lender a mortgage application in his own name that contained false information regarding his income and occupation and which was supported by false payslips from a company for which he had never worked.  He also submitted to a lender at least one other mortgage application which contained false income details and which was supported by false financial statements.  He also failed to notify the FSA that Mac & Mayo had been removed from the panels of at least six mortgage lenders.

The FSA has also cancelled the trading permission of OCS Property and Financial Services Limited and of Mac & Mayo Property Services Limited.

A ban on mortgage partners for serious regulatory failures

We have banned two Wakefield mortgage brokers Derick Whewall and Alan Hewitt, partners of The Mortgage Exchange for failing to meet the standards expected of approved persons in terms of competence and capability. They failed to ensure adequate measures were in place to prevent their partnership from being used to submit potentially false mortgage applications and exposed about 250 customers to the risk of receiving unsuitable advice.

The partnership’s systems and controls, management information process and monitoring of advisers fell way short of what is required creating unacceptable risks relating to unsuitable advice and financial crime. We are continuing to find instances where mortgage brokers are unwilling or unable to maintain the standards we require and where we come across this we will take action including banning them. The partnership did not obtain and record sufficient information to establish customers’ needs and objectives and its assessment and recording of affordability of recommended mortgage contracts was inadequate.