The Financial Conduct Authority has announced a range of sanctions against the director of a mortgage broker over his alleged failure to effectively oversee the activities of his firm. The individual has announced that he intends to appeal the FCA’s decision to the Tribunal.

The FCA’s planned sanctions are:

  • Withdrawing his permission to carry out senior management functions at the firm
  • Banning him from carrying out any role within regulated financial services
  • Imposing a fine of £25,000

The FCA says it believes he is not a fit and proper individual and that his actions breached FCA Principle 1, which relates to acting with integrity

The most serious allegations relate to alleged mortgage fraud. Two lenders are said to have removed the brokerage firm from their panel because of concerns in this area. Identified inconsistencies included:

Dates of salary payment on a customer’s payslips which were materially different to the date the salary actually appeared on the customer’s bank statement

Unexplained fluctuations in salary from one month to the next

The FCA’s Decision Notice also says:

  • The director allowed the firm to continue trading for a three-month period during which it did not have professional indemnity insurance in place
  • The firm was at an unacceptably high risk of being used to facilitate financial crime
  • The firm’s record keeping was inadequate, and its records were not sufficient to demonstrate that it was providing suitable advice
    The director showed the FCA a number of documented compliance procedures, but the regulator says that there was no evidence that these procedures were ever implemented, or that their content was reviewed periodically by the firm. The Mortgage Sales Process stated that the firm would require payslips and bank statements to be collected from customers and checked for inconsistencies, but the FCA says it identified a number of cases where this did not occur
  • There was no evidence that the director or anyone else carried out any file reviews or other monitoring of new business
  • The individual failed to act effectively in relation to concerns raised by the FCA over a four-year period – the Notice says that the director “satisfied the Authority for brief periods that he had addressed these concerns” but that “by the time of a visit by the Authority to [name of firm]’s offices in May 2017 it was apparent that [name of director] had permitted [name of firm] to revert to practices in relation to which the Authority had previously expressed serious concerns.”
  • The director has “minimal training in financial services” and does not hold a recognised mortgage qualification