FSA fines IFA firm £35,000

Marcel Le Gouais
23-Jul-2008
The Financial Services Authority has fined PMSG Insurance Services £35,000 for mortgage advice breaches.
The regulator says the firm failed to ensure advice given to customers was suitable, did not organise its business responsibly and failed to manage risk properly.

The FSA has also withdrawn its approval for the firm’s compliance officer, Irene Hall, as it found she lacked the competence and capability to ensure the firm complied with FSA regulations over treating customers fairly.

Jonathan Phelan, head of retail enforcement for the FSA, says: "It is unacceptable that PMSG exposed at least 620 customers to the risk of being recommended mortgages that they could not afford or did not need.

"All firms must gather sufficient information from their customers about their needs and must organise and control their business to ensure the advice they give is suitable and customers are treated fairly.”

In recommending mortgages, PMSG failed to take fully into account its customers personal and financial circumstances.

Customers were advised to remortgage their properties while they were still subject to an early redemption charge which may have reduced any benefit of remortgaging.

The firm also did not seek to verify information provided by customers which was inconsistent with information provided by them at an earlier point in the sales process.

The firm also failed to retain sufficient records of information about its customers to prove the suitability of the advice it gave them.

The firm has agreed to review its customers’ files to establish whether there has been any detriment and will undertake a review to identify any unsuitable recommendations made to customers.

The report will also identify whether any redress needs to be paid by PMSG to any of its customers.