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Action taken against two brokers for mortgage fraud

The Financial Services Authority has taken action against two mortgage brokers for allowing false and misleading mortgage applications to be made to lenders.

Ngozika Louise Ogboru who ran J N Finance, a mortgage broking firm based in Harrow, has been banned and Ronald Winton from Mortgage Healthcare in Dundee has been fined £31,500 and will be unable to hold a senior position in a financial services firm for two years.

Ogboru would have been fined £65,000 had it not been for evidence that the fine would have caused serious financial hardship.

As the only approved person at the firm, it was Ogburu’s responsibility to implement adequate systems and controls to properly monitor staff and prevent mortgage fraud.

But the FSA investigation found that advisers at the firm were able to submit false and misleading mortgage applications to lenders using Ogboru’s log-in details, without her prior knowledge. In fact, an employee was still using her log-in details five months after his employment was terminated at JN Finance.

Ogboru admitted incompetence in running her firm and had considered reducing JN Finance’s permissions so that it could no longer arrange mortgages. However, she continued to run the business in the same irresponsible way, despite obvious warning signs that JN Finance was being used to commit mortgage fraud.

As sole director and approved person at his Dundee-based mortgage and general insurance firm, Winton had ultimate responsibility for managing and monitoring his firm’s business. However, he ran a separate business from different premises, and delegated day-to-day responsibility of Mortgage Healthcare Limited to two non-approved advisers.

A previous FSA visit to the firm identified concerns at the level of interest only mortgages and self certification of income in files. During a further visit, the FSA found no evidence that Winton had taken any action to rectify the problems.

When interviewed by the FSA, Winton expressed concern that 65% of the firm’s business was interest-only mortgages, but stated he had no control over this.

He also admitted that advisers were still failing to check the feasibility of customers’ repayment strategies for interest-only sales.  

The FSA identified 14 out of 19 cases in which it appears that customers submitted mortgage applications to lenders which contained false or misleading information about their incomes.

The FSA also found problems with the suitability of advice given to customers and inadequate complaints handling procedures. Mortgage Healthcare Limited, Winton’s firm, has had its permissions removed and ceased trading.

Margaret Cole, director of enforcement and financial crime at the FSA, says: “FSA rules ensure that financial services firms operate safely, protecting both their customers and the industry itself. Anyone found flouting those rules will face stiff penalties.

“Ogboru and Winton were not of sufficient calibre to run their firms to the standards expected by the FSA, and as such have either been removed from the industry or prevented from holding senior positions.”

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  • anon 2nd September 2010 at 9:54 pm

    I hope the police look at these cases. White collar crime is still crime, just smarmier. What kind of message does a small fine send out? Jail them.

  • anon 2nd September 2010 at 9:53 pm

    I hope the police look at these cases. White collar crime is still crime, just smarmier. Jail them.

  • Tom Cleary 31st August 2010 at 5:14 pm

    Agreed. That is exactly why the industry needs individual registration…

  • mike 31st August 2010 at 4:54 pm

    okay, so the principle did not have the proper controls in place and rightly he should take the flak.

    But what about the to brokers who ran the day to day operation, they must hold some responsibilty as they were the one giving the advice and assisting in completing the mortgage applications.

    Are they still trading and what sanctions have been placed on them from the FSA.

    My bet is they are trading elsewhere and still carrying out their business like they always did. The FSA should look closer what took place here and ensure that all concerned are punished accordingly

  • salil chaudhari 31st August 2010 at 3:16 pm

    It makes you wonder what on earth the FSA are looking for in deciding at the application stage whether or not to approve someone as an ‘approved person’ when many are subsequetly failing this test.
    I suspect they are quick at banking the application fee and asking questions when it is too late.

  • Tom Cleary 31st August 2010 at 2:58 pm

    Two years is not enough. He should be banned for life.

    Also, why would anyone use their ex-employers log-ins five months after they left? How did they expect to get paid on the case?

  • Chris Law MD The Mortgage Doctors Dundee 31st August 2010 at 2:42 pm

    The bloody check of it, my understanding is that this is a light offense and doesnt really strike fear into any potential fraudster looking to pursue white collar crime. I am positive a lot more will come out in the wash with this bunch.

  • Tom Cleary 31st August 2010 at 12:28 pm

    Good riddance to bad rubbish…