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FSA/PN/042/2008
22 May 2008

The Financial Services Authority (FSA) has today publicly censured Mortgageland Limited (Mortgageland) for poor financial promotions, inadequate sales processes and record-keeping failings.

The FSA visited London-based Mortgageland and found that the firm:

• failed to give sufficient prominence to the Annual Percentage Rate in a mortgage promotion aimed at people with County Court Judgments, loan arrears or defaults;
• in another promotion, failed to indicate the level of fee that customers would be charged or set out that the fee included an amount to cover other fees which were paid by the firm on the customer’s behalf; and
• in addition, failed to record appropriate details of customers' needs and circumstances including, in some cases, how customers planned to repay the mortgage and their income and expenditure details.

The FSA considered Mortgageland’s failings to be serious due to the potential impact on its customers, many of whom were recorded as having adverse credit histories or were consolidating debts, or both.

Margaret Cole, Director of Enforcement at the FSA, said:

"Taking out a mortgage is one of the most important decisions anyone makes during their life.  Poor practice by firms in this area poses a high risk to consumers - and this is particularly the case when it comes to sub-prime mortgages, given the vulnerable nature of the target audience. 

"It is essential that firms' financial promotions are clear, fair and not misleading, so that consumers know exactly what they are buying.  And poor financial promotions often go hand in hand with other problems at firms – in this case, the firm also demonstrated poor record-keeping, both in terms of assessing suitability and documenting recommendations made."

Once made aware of the FSA’s concerns, Mortgageland amended its financial promotions and took steps to remedy the other failings.  Mortgageland has agreed that any future mortgage-related financial promotions will be approved by an individual with appropriate expertise. 

Notes to editors

1. The Final Notice, which sets out more information about the case, is available on the FSA website.
2. Mortgageland’s failings were identified when the FSA visited firms – in October and November 2006 – which were found to be falling short of its requirements during an earlier review of several hundred sub-prime adverts and promotional materials, including flyers and classified adverts in directories and regional newspapers.  These follow-up visits found that weaknesses relating to advertising and promotions usually indicate wider problems within firms.  More information about the FSA's 2006 review of financial promotions in the sub-prime market is available in Press Notice 125/2006. 
3. This work on promotional material sits alongside another FSA project which looked at whether customers are treated fairly throughout the sub-prime mortgage advice and sales process.  The findings of this work were published in July 2007, and five firms were referred to enforcement as a result of the failings identified.  Mortgageland Limited is not one of these five firms.  
4. The FSA operates a proactive, risk-based approach to financial promotions focusing on areas where consumers could be most at risk.  More information on the financial promotions regime is available on the FSA website.   
5. Anyone who sees an advert or other promotion that they think is misleading can report it by calling the FSA's Financial Promotions hotline on 08457 300 168.  Information on how to report misleading adverts is available on the FSA website.
6. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
7. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.