Lie-to-Buy Mortgage Brokers & the FSA.

FraudBuster

FSA/PN/119/2008
16 October 2008
The Financial Services Authority (FSA) has fined Doncaster mortgage broker Orchid Financial Limited £34,500 for failing to ensure it provided suitable advice which exposed over 900 customers to the risk of being sold an unsuitable mortgage.

http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/119.shtml

FSA/PN/118/200
16 October 2008
The Financial Services Authority (FSA) has fined two directors from Abbey Mortgages Limited, based in Bexleyheath and Stokesley, £30,000 each for shortcomings in their mortgage business which put financially vulnerable customers at risk and the firm at risk of being used for mortgage fraud.

http://www.fsa.gov.uk/pages/Library/Communication/PR/2008/118.shtml

baby_boomer

MSE thread - FSA closes the mortgage lending stable door after the reckless lending horse has bolted

I posted the above in September - based on an article in MoneyFacts.

It explains what the FSA is looking for in its investigations.

mic200202

Talking about fraud you will notice that all the brokers so far censured by the FSA are DA. The BIG area not getting any attention are those advisors working for AR's who arent registered anywhere,and can move from network to network with impunity.I am aware of one situation that an advisor was investigated by his networkfor fraud,suspended,then got banned by at least one lender,yet was able to move to another network with no apparent difficulty.The general public are none the wiser to this rogue. In this respect I have some sympathy for those DA brokers who get lynched for lesser offences.AR brokers are working under the pretence they are shielded from any intrusion by the FSA so they can do what they like.Scandalous situation.

dunstonh

Talking about fraud you will notice that all the brokers so far censured by the FSA are DA.

Not unsurprising. Of course, by itself it doesnt mean DA is any better/worse as there are some very good DA advisers. However, as a DA you can get away with things that a network would never allow you to get away with. The only time you get found out as a DA is if you get too many complaints (triggering an FSA visit) or an FSA routine visit.

The FSA have said that those firms that use support providers (such as networks) may get a regulatory dividend under the RDR proposals. That would suggest that their research has found that networks now in general offer a higher standard than DA. Not too many years ago, being a network member meant nothing from a compliance point of view. Some of the networks were down right rubbish at compliance (some still are...ahem PT )

I think you will find that a lot of the reasons DA firms are being caught more now is that the FSA is doing far more visits to small firms than it has ever done before.

mic200202

Yes they are doing far more visits to small firms at the mo hence the fallout. From what I understand they are straining at the least to get among the AR's out there. And thats with the individual firms not the head office type visits as before.I believe what we have seen among the small DA firms will be nothing compared to terrors that lurk within the networks.PT? surely not? see example above....they are a dumping ground for the low lifes.

dunstonh

I know three firms locally that have had FSA visits and 2 were network ARs and one was DA. The network ones have had only minor points raised. The DA isnt saying anything about the outcome.

I dont think you can say much about networks as the standards vary so much. Some are very good on compliance now (as they werent in the past and have been fined into getting it right). Others are just nightmares.

koexelek

I am even more careful now that I am DA than I was when I was part of a network.

I looked at the network compliance as being a bit of a safety net, where as now the buck stops fully with me.

dunstonh

koexelek wrote: »

I am even more careful now that I am DA than I was when I was part of a network.

I looked at the network compliance as being a bit of a safety net, where as now the buck stops fully with me.

If you are self employed or partnership the buck stops with you whether you are with a network or DA. When you are personally financially liable for the advice you give you are more likely to play it safe.

That is probably one of the reasons why salesforces have the high complaints stats compared to independents. (the others being salesforce targets, incentives and manager pressures)

I would like my network to stop referring to themselves as a network as it has moved away from that more now. They are really just back office compliance support (which fits the model that FSA are looking at). I couldnt stand being with one of those networks which is just a glorified salesforce.

koexelek

dunstonh wrote: »

If you are self employed or partnership the buck stops with you whether you are with a network or DA. When you are personally financially liable for the advice you give you are more likely to play it safe.

Yes, I know what you mean.
When I was part of a network, the files used to be signed off by a quality unit, where as now, no-one else checks them.

hearts

Self Cert mortgages were created by banks for one reason. To allow then to give mortgages to people who couldnt on paper afford them, and at the same time allow them to appear still be doing ligitimate business.
They paid lip service to the law but were in reality not interested in catching anyone.
There was a whole section of the population out there they couldn't reach to lend money to and this allowed them to reach them.

Fraud my arze. This was a situation created by banks for the sole purpose of lending as much as possible. Targets had to be reached and this allowed them to reach them.

Now things are going tits up they are trying to take the moral high ground, while in reality it was their greed that caused it.

There was a simple way to avoid this. DON'T ISSUE MORGAGES WITHOUT PROOF OF INCOME!

I bet there aren't many Self Cert mortgages about now, eh? ;-)

Don't balme the poor guy who was trying to get a home or even the broker who was merely trying to earn a decent wage. PUT THE BLAME WHERE IT BELONGS. WITH THE GREEDY BASTOORDS RUNNING THE BANKS!