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FSA fines Rainbow Homeloans 35,000

The Financial Services Authority has fined Rainbow Homeloans 35,000 for systems and controls failings which exposed around 1,000 people to the risk of being sold unsuitable products.

The FSA found that RHL’s management had not ensured that, as directors, they were approved to perform their regulated function and had not adequately monitored and controlled the business at all times.

Instead, RHL’s management relied to an inappropriate extent on an external consultant for overseeing compliance-related matters and ultimately for ensuring the fair treatment of customers.

The failings in RHL’s sales process were considered serious as RHL failed to demonstrate product suitability, to provide customers with relevant Key Facts Illustrations at the right time and handle complaints properly.

Stephen Bland, director for small firms at the FSA, says: “RHL’s management failed to take adequate responsibility for the business to ensure compliance with the FSAs principles and rules and the fair treatment of its customers.

“Where and when appropriate the FSA will use its enforcement powers to ensure that management take seriously the requirement on firms to comply with regulatory requirements and treat customers fairly.”

In taking action, the FSA took into account RHLs co-operation and its agreement to conduct a review of past business.

RHL also agreed to settle at an early stage of the FSAs investigation and therefore qualified for a 30% discount otherwise the penalty would have been 50,000. RHL has now ceased conducting all regulated business.

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