FSA fines and bans mortgage broker
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The Financial Services Authority has fined and banned a mortgage broker for submitting false and misleading information to lenders on mortgage applications.
Michael Joseph James Lewis trading as Lewis Partnership in Kent has been fined £106,499
The financial penalty comprises of a disgorgement of commission/fees of £6,499 arising from the fees paid to Lewis on completion of five regulated mortgage contracts which were arranged by him and a punitive element of £100,000.
The FSA has concluded that Lewis knowingly submitted regulated mortgage applications in his own and clients’ names to lenders containing false and misleading information, including inflating incomes, providing false employment details for his clients and acquiring, certifying and providing a falsified payslip to a lender for a client in order to provide evidence of an inflated income.
In its Warning Notice the FSA says Lewis submitted mortgage applications for Client Y, which provided differing and inconsistent employment and income information. Specifically, he submitted mortgage applications:
- To lender B in March 2006 , stating that he was employed as a technician by a college with a gross basic salary of £22,000
- To lender E in April 2006, stating that he was self-employed as a film producer with self-employed earnings of £145,000
- And to lender A in August 2008, stating that he was self-employed as a film producer with a net profit amount of £145,000 (year end 04/2008), £139,000 (2007), and £135,780 (2006).
But the FSA says this conflicted with information provided to the FSA by HMRC from its records for Client Y, which state that Client Y was in fact employed on a PAYE basis until August 31 2007 by 1) a college and thereafter by 2) a pension provider, with income of 1) £22,754.33 (2005/6), £25,314.87 (2006/7), and £11,422.06 (2007/8), and 2) £1,820.98 (2007/8), respectively.
Tom Spender, head of retail enforcement at the FSA, says: “While the vast majority of brokers are honest and diligent, Lewis knowingly broke our rules. Lewis is the 107th individual that we have prohibited from working in the industry through our investigations into misconduct by mortgage brokers. We have said before that flagrant breaches of our rules will result in severe penalties, and this significant penalty of £106,499 is further evidence of our approach.
“Many of our mortgage fraud cases have started out as referrals via the Information from Lenders scheme, but we are keen for more intermediaries to report wrongdoing to us as well. There is a mechanism in place for this, similar to the IFL scheme, but to date there have been very few reports from the broker community.”
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