FSA fines mortgage firm for failing to prevent fraud
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The Financial Services Authority has fined County Down mortgage intermediary Case Funding Centre £35,000 for failures which led to at least 16 fraudulent mortgage applications being submitted to lenders.
James Ian Shanks, a former partner and mortgage adviser at CFC, has been banned for recklessly submitting false information to lenders.
During its investigation the FSA found that CFC did not have adequate systems and controls in place to counter the risk of customers and staff submitting mortgage applications based on false income and employment information.
Furthermore, advisers did little more than superficial ‘sense checks’ on mortgage applicants’ income and employment details.
These failings, combined with CFC’s historically weak recruitment process, led the FSA to conclude that the firm had exposed itself to the risk of being used to facilitate financial crime.
In addition, Shanks was shown to have submitted mortgage applications from CFC’s advisers containing income information that he failed to verify against the firm’s records, despite being aware that such a check was possible.
Margaret Cole, director of the FSA’s enforcement and financial crime division, says:“We expect all authorised firms, including lenders, to take the necessary steps to stop their businesses from being used to commit crime. We also expect high standards from individuals who are approved by the FSA to perform significant influence functions.
“Both Case Funding Centre and Shanks fell short of the standards we expect and they are being punished for their failings. We will continue to take action against any firm or individual who present a risk to our objectives of reducing financial crime and maintaining market confidence.”
CFC and Shanks co-operated fully with the FSA during the investigation and agreed to settle at an early stage. Therefore a 30% discount has been applied to the proposed penalty of £50,000 for the firm.
Shanks was approved to perform ‘significant influence’ functions at CFC.
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Readers' comments (9)
Anonymous | 7 Jan 2010 11:32 am
this does not supprise me - as an underwriter i regularly came accross these applications - all completed with the same handwriting / massive salary declarations ......
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Anonymous | 7 Jan 2010 11:54 am
can't believe its taken the fsa so long I agree with the above underwriters knew they weren't to be trusted...
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Anonymous | 7 Jan 2010 2:08 pm
Underwriter.........if it was that obvious I assume that you declined the deal and put it on the HUNTER system and perhaps referred it to your MLRO ?
If not expect a chap at the door!!!
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Anonymous | 7 Jan 2010 2:55 pm
MMM
Why would an underwriter who suspected something was amiss not report it?
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Anonymous | 7 Jan 2010 3:41 pm
I believe that the FSA has finally caught up with them and the decision is right, but nobody is whiter than white!!!
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Martin Jackson | 7 Jan 2010 5:17 pm
Underwriter my foot.... don't big yourself up, all you so called “underwriters" were really just admin clerks with a posh badge. Like the earlier poster said, if you knew it was going on then why didn't you do something about it? In my book, you and your managers are just as much to blame for this mess as the brokers who sold your mortgages, in fact, you're more to blame because you could have done something to stop it, or did your bonus have some bearing on your decision? The words; glass houses and stones come to mind - not to mention "BDM's"!
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Anonymous | 7 Jan 2010 9:34 pm
Underwriters did spot the problems and underwriters did report them. However the FSA, as usual, have taken some considerable time to get to today. There are other names I look forward to seeing over the rest of 2010. We are not glorified admin clerks - We can spot problems that no computer or credit score can
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Anonymous | 8 Jan 2010 9:37 pm
Underwriters aren't what they used to be. Go back 10 years and you had access to a human being and a broker could represent their client and put forward an argument for an agreement in principle. These days, with experian and automated decison making systems the ability to "look into the white of the clients eyes" has been eroded. Bring back the "old greats".
It doesn't mean of the client has missed a catalogue payment he'll not pay his mortgage.It gave the sub-prime lenders a reason to add 3% to the cost of a mortgage and profit from it.....the high street banks were too blind to see that they lost good business to the competitors. Experian should be used for unsecured lending not secured lending at low LTV's if all else is right about the case.
The industry needs these things to happen.
1) Individual registration with a practising license.
2) Banks to stop hiding behind data protection to keep introducers informed about the clients mortgages. It's not difficult to amend the contracts or charge forms to allow this.( well done Accord)
3) FSA and Lenders to stop punishing all advisers in a firm by imposing a blanket ban and hinder the right to earn a living for the honest ones. HBOS pls note.
4) Bring back local relationships and empower branch managers to accept business from a local patch and process either inhouse or via head-office.The local chaps were well placed to smell rats!
5)Stop introduction rights for brokers who fails to act diligently in mortgage applications.
This would be a start......lets see if in the next year we can make some progress towards these points!!
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Anonymous | 9 Jan 2010 1:37 pm
Agree with last comments, but will also say even when lenders are aware of how some introducers/brokers/packagers operate they still insist on more business. Its a greedy world out there. e.g Lehman Brothers/Preferred/SPML/Commercial First, these and more all seeking business, all paying "good" fees but also selling on their mortgages on the wholesale market and basicaly putting us in the postion the banking world is in now.The buck stops with the lenders & the toothless FSA.
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