FSA fines broker for self-cert mortgages failings

The Financial Services Authority (FSA) has fined Nottingham-based Gillen Farrelly Independent Advisers £17,500 for flawed self-certified mortgage advice. 

The regulator said the firm had failed to check around 80 clients' income or credit histories when it recommended mortgage deals and did not keep the paperwork. The firm also failed to check out a third party introducer which could have exposed the firm to fraudsters, the FSA said. 

‘Brokers advising on mortgages need to give suitable advice to ensure that customers are not unduly exposed to financial hardship in the future,’ said Georgina Philippou, head of retail enforcement at the FSA. ‘This is especially important in firms like Gillen Farrelly who advise customers who might be consolidating debts or have adverse credit histories and where affordability is an important consideration.’ 

Self-certified mortgages have been nicknamed ‘liar loans’ as consumers exaggerate incomes to keep up with rising house prices. The FSA noted the firm had called in compliance consultants, fired the introducer and no longer sells self-certified mortgages.