The Financial Services Authority (FSA) has taken action against three mortgage brokers that may have resulted in clients taking out home loans that weren’t 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 and 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.
August 20th, 2007 at 8:32 pm
I recieved a number of nuisance calls from Mortgage Network Solutions over the last few weeks. They originlly cold called me and stupidly i agreed to see one of their so called advisors. when he came around he was late, scruffy and uninformative. i asked him what qualifications that he had and he said he was in the process of completing them!!! Then he tried to get me to sign for a £3k fee without explainging the hidden csts first. I sent him away and since then they have been badgering me. Now when I looked on the inernet i have seen this!!!!Stay away