FSA fines broker
The UK's financial regulator, the Financial Services Authority, recently decided to fine a mortgage broker dealing with equity release mortgages, claiming that it had found 'persistent record keeping failures and systems and controls deficiencies' during investigations into the firm.
The Minel Group, based in Newcastle Upon Tyne, was fined £10,500 by the Financial Services Authority following the investigation over the mis-selling of these lifetime mortgages, and was also told to review the sale of equity release mortgages between November 2004 and December 2005, issuing compensation to customers that had lost money through the mis-selling of these mortgages.
The Minel Group deals primarily with buy to let and commercial mortgages. Although it offered advice and services in the equity release mortgage market the Financial Services Authority claims that the company did not have adequate procedures in place and was unable to offer quality advice in relation to these equity lease mortgages. This is the first time such action has been taken against a lifetime mortgage broker by the FSA.
One FSA official stated: 'We remain concerned about higher risk products like lifetime mortgages, and the FSA has been monitoring this aspect of the market since mortgage regulation began. Firms must have appropriate systems and controls in place to ensure that suitable advice is given on these products even where, as in this case, a firm is writing low volumes of business.'
She added: 'This is the first time we have taken such action against a lifetime mortgage adviser, and the combination of a fine, a past business review, and ceasing all lifetime mortgage business should leave firms in no doubt that the FSA will hold them to account if they fail to treat their customers fairly.
Tom Smith
18th November 2007
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