FSA fines and bans Bolton mortgage broker
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The Financial Services Authority has fined and banned Bolton based mortgage and insurance broker, Riaz Ahmad.
Ahmad has been fined £5,000 and prohibited from working in regulated financial services for failing to act with competence and capability, which included failing to have suitable compliance and risk management processes in place at Finance.com.
Ahmad’s failings and the problems at Finance.com were initially picked up by an FSA team conducting an assessment focused on treating customers fairly as part of the FSA’s assessment programme for small firms.
The FSA’s investigation found that Ahmad was unable to demonstrate he had the competence required to be an approved person.
Specifically he failed to:
- Understand the responsibilities associated with running a regulated mortgage business;
- Put in place adequate supervision arrangements, effectively leaving a mortgage adviser to run the business despite not holding any controlled functions;
- Ensure that compliance failings were addressed by liaising with Finance.com’s compliance consultants;
- Monitor the suitability of mortgage advice provided by Finance.com’s staff; and
- Put in place adequate risk management systems to prevent Finance.com being used to further financial crime.
As a result of these failings, customers were put at risk of receiving unsuitable mortgage advice and mortgage applications were submitted to lenders containing inaccurate and misleading information.
Margaret Cole, director of enforcement and financial crime at the FSA, says: “Ahmad failed to meet the minimum standards we require of an approved person; because of this we have concluded that he is not fit and proper to run a regulated firm.
“This action confirms our ongoing commitment to ensuring that customers are treated fairly and firms have the necessary procedures in place to make sure they are not open to being used for financial crime.
“When firms fall short of these requirements, we will not hesitate to take action and the worst offenders will be punished severely.”
Had it not been for Ahmad’s financial hardship, the FSA would have sought a fine of £17,000.
As Ahmad is the sole director and only approved person at Finance.com, his ban means the firm is unable to continue trading.
Finance.com and Ahmad became authorised and regulated by the FSA in August 2005.
Readers' comments (10)
Andrew | 20 Jan 2010 10:18 am
Yet another broker who's failed to comply with simple regulations.
Unfortunately there are probably a lot more like hin still trading.
The FSA needs to take a fresh approach to ensure that only compliant firms conttinue to trade
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Anonymous | 20 Jan 2010 11:24 am
typical FSA approach - whilst i'm not defending him the FSA seem to have a habit of going after the 'little guy', yet companies like MTG and NDL go to the wall taking down dozens of brokers with them with little recourse. the fsa will earn far more respect from our community if they bare their teeth and take on some of the bigger guys
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Glen McKeown | 20 Jan 2010 11:29 am
Interesting reaction by Andrew. Ahmad failed to cope with the regulations such as not having suitable systems in place. However, according to the FSA he was the only person able to give advice or present business. So who would enforce compliance. And who would be supervising whom? (I can feel a Monty Python sketch coming on).
There is no indication in what the FSA said that any client money was put at risk or that there was bad advice given.
So the crime apparently was not doing anything wrong, but failing to do the required paperwork - and for that one can lose one's livelihood - which to my mind appears excessive.
I would add one further, rather sensitive, comment. A significant number of these cases appear to involve members of what I can only call minority communities. I accept that my analysis is based on a broad assumption, namely that of the style of name, but on one day recently I noted that 50% of the people disciplined were from "minority" communities. Since these communities are less than 20% of the total population, a 50% content is excessive.
So we have to consider what that may mean. Are minority communities basically deviant? Or is it that they have a different approach and have problems understanding and dealing with our rather bureaucratic approach? Remember that the FSA is middle class white civil servant answerable to no-one, and from what has been indicated in many reports not particularly understanding or sympathetic. So is the problem genuine deviancy by the minority communities or a serious breakdown in communication. Remember that most of the white middle class constituents of the IFA profession find a lot of the FSAs requirements fairly meaningless - though being British we abide by them.
Reading a number of the FSA's pronouncements I have been struck by an innate sense of righteousness in their statements, rather than a serious wrong doing on the part of the "culprit".
Nobody wants fraudsters as IFAs, but the question that no one is asking is are we getting rid of the relatively honest as well.
In which case a possible conclusion is that we will be so focused by fear on complying with the regulations that we have little time and energy for quality advice.
This is an discussion that is taking place on the web between the cognoscenti - shouldn't it be aired in public also.
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Anonymous | 20 Jan 2010 12:14 pm
Once again a broker gets pulled by FSA - Just spoken to a prospective client who asked me for a Self Cert mortgage - I duly went on to explain there are no such mortgages available in the whole of the market at the moment - the prospective client then told me I was wrong because the Halifax said they would do one yesterday and no income would be needed! She was then very guarded because she though I did not know what I was talking about! How is it we brokers who are trying to stick to the law of the FSA get hauled over the coals but yet the lenders are allowed to still openely say they do self-cert and get away with it? Do the FSA have mystery shoppers going into Lenders branches ???????
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Steve Brown | 20 Jan 2010 1:06 pm
From this continual drip feeding of stories by the FSA on the poor quality they are finding from some small directly authorised mortgage brokers it is clear that they would prefer this type of business to disappear as they are a hassle for the FSA to regulate. The FSA are therefore using these press releases to scare individual directly authorised brokers and push them into the hands of networks which makes the FSA's life easier.
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Shaks | 20 Jan 2010 5:31 pm
The FSA have nothing better to do than criminalise a broker who apparently defrauded no one. Nobody appears to have been dis-advantaged. It appears that his crime was a lack of understanding of the over-burdening FSA regs or the inability to perform to the pathetic and mostly meaningless standards that are now expected. The FSA should get their own house in order first and stop claiming extravagant £200-£400 a night hotel rooms when the handbook clearly states the limit is £150 per night. If this brokers business was good honest business then he should have been asked to get assistance or be recommended further training.
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Anonymous | 21 Jan 2010 10:15 am
The FSA have introduced a police state to Financial Services: Pol Pot was more resaonable
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Anonymous | 21 Jan 2010 1:23 pm
Glen,
A brave comment indeed and it could well be a valid point.
If there is a problem interpreting FSA policy within these communities then the FSA should have a duty of care to indentify it and offer support.
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Anonymous | 22 Jan 2010 9:05 am
Within the next 4 weeks I will be starting my own General Insurance Brokerage. It is scary stories like this, and the FSA's ridiculous fees, jargon, red-tape and beurocracy which has given me no option but to become an appointed representative, rather than D.A. Without paying for the services of an agency to get me Directly Authorised, I found find it near impossible.
Come on FSA- Yes; you must regulate to keep out the bad. But if you're too defensive you'll prevent the good from getting in!
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Anonymous | 25 Jan 2010 11:00 am
Are the Conservatives still abolishing the FSA if they come to power?
The FSA need to treat their customers fairly - us. Have you read 3.23.32.2.3.2.3.2.3.2.385.563.8 when you ask a question of them.
We are told to be clear , not misleading and fair to our clients... We are there clients....why can't they do the same for us. Another small broker gone to the wall. Have you got the guts to go after the high street banks...
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