The case arose from an FSA thematic project looking at the sale of self-certified mortgages.
Between January 2006 and April 2008 the firm failed to make appropriate enquiries about customers’ source of income, expenditure, credit history and debt position, so that it could properly assess the affordability of its recommendations; and failed to demonstrate the plausibility of customers’ declared income and expenditure.
Georgina Philippou, head of retail enforcement at the FSA, says:“At all times, and especially in times of economic difficulty, mortgage brokers need to give suitable advice to ensure that customers are not unduly exposed to financial hardship in the future.
“This is especially important in firms like Mortgages Remortgages who specialise in self-certified mortgages and advise customers who are consolidating debts or have adverse credit histories. The firm’s failings exposed its customers to potentially significant financial detriment by failing to give proper consideration to the long term implications of the products recommended in relation to their financial circumstances.”
The FSA has taken into account the fact that the firm has agreed to undertake a customer contact and remediation exercise.
In determining the penalty, the FSA has had regard to the financial position of the firm. Were it not for this, and the fact that the firm needs to be able to pay for the customer contact and remediation exercise, the FSA would have sought to impose a financial penalty of £20,000.