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FSA fines and censures mortgage brokers over fraud
The Financial Services Authority has banned one mortgage broker and fined another for failing to prevent false mortgage applications being made to lenders.
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More FTSE charts & pricesby Iain Martin on Aug 31, 2010 at 13:37
The Financial Services Authority (FSA) has banned one mortgage broker and fined another for failing to prevent false mortgage applications being made to lenders.
The FSA banned Harrow-based Ngozika Louise Ogboru of JN Finance for failing to prevent staff from using her business to submit false mortgage applications. One employee was still using Ogboru’s passwords to apply for false home loans five months after she had left JN Finance, according to the regulator.
‘Ogboru continued to run the business in the same irresponsible way, despite obvious warning signs that JN Finance was being used to commit mortgage fraud,’ stated the FSA. Ogboru would have been fined £65,000 but this was waived on the grounds that it would cause serious financial hardship.
The FSA fined Ronald Winton of Dundee-based Mortgage Healthcare £31,500 for not taking control of a broking business which he left under the management of two non-approved advisers.
The FSA identified concerns about the level of interest-only mortgages being arranged by the two advisers but Winton did not take any action. After investigating, the regulator found problems with the suitability of the advice given to customers and the firm's complaints handling procedures.
Winton has also been banned from holding a senior position in the financial services sector for two years.
Margaret Cole, FSA director of enforcement and financial crime said: ‘FSA rules ensure that financial services firms operate safely, protecting both their customers and the industry itself. Anyone found flouting those rules will face stiff penalties.'
‘Ogboru and Winton were not of sufficient calibre to run their firms to the standards expected by the FSA, and as such have either been removed from the industry or prevented from holding senior positions.’
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4 comments so far. Why not have your say?
Keith Snell
Aug 31, 2010 at 17:35
Since when did a fine get commuted for causing financial hardship, this is lunacy. What point the cost of running the FSA if having identified fraud it fails to take effective action against those causing the it. This just means we pay for the fraud and then pay again for those who are clearly incapable of regulating effectivly, who will fine the FSA for such lax regulation?
report thisTonyP
Aug 31, 2010 at 17:42
Totally agree Keith
report thisAdam Smith
Aug 31, 2010 at 19:31
Keith - this has always been FSA policy; there have been numerous recent examples if you keep up with the final notices they publish. It was only the recent Atlantic Law tribunal case where the judge said something along the lines of 'although the purpose of fines is not to bankrupt someone [it's there as a deterrent to the wrongdoer and others], if that happens in some cases then it's not necessarily the wrong outcome'.
Bear in mind that the FSA only reports its own actions, and other agencies may get passed the case too. If you read these final notices, you'll see that one of the customers who lied about their income (and thereby committed mortgage fraud) was in fact an HMRC employee - wouldn't want to be that person after HMRC got the income validation request from the FSA! Also I can't see the HMRC publicising what happened next...
It's also worth considering the general case of someone caught lying about their income. If they admit to lying on their mortgage form, they're facing a fraud charge (up to 10 years under the Fraud Act 2006, seven if comitted before that came into force) but, if they stick to their guns about the number on the form then they must have lied to HMRC on their tax return - and that carries 20 years instead. Which would you admit to in those circumstances?
report thisHarry Katz
Aug 31, 2010 at 19:48
Is no coincidence that you are having so may Mortgage Brokers censured, fined and stuck off. They have (and still do) enjoy a lesser regulatory regime than IFAs and this is plainly completely ridiculous.
Isn’t it about time that there was no difference in the regulations which should apply across the board.
No one would pretend that this would result in a 100% success rate, but if you would care to examine the statistics you will see that the IFA community by comparison has a halo.
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