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FSA bans director of mortgage brokerage

The Financial Services Authority has banned mortgage brokerage director Martin Russell Lafrance, for not having the proper systems and controls in place to detect financial crime.

While a director at Dorset based General Finance Centre between October 31 2004 and December 19 2008, the FSA found Lafrance failed to ensure that reasonable checks were undertaken to verify the accuracy of the information provided by customers and identify irregularities in mortgage applications.

Lafrance was the operations director responsible for the administrative team of seven staff in the operations department, which processed the regulated mortgage contracts, and he had a specific responsibility to ensure that systems and controls to prevent financial crime were being followed in his department.

The regulator found that in one case a man who operated a motorcycle breaking business declared on his mortgage application that his income was £450,000 per annum.

Yet a letter from his accountant on the customer file advised that his business made a pre-tax profit of £24,000.

However, GFC processed the mortgage application on the basis of an annual income of £450,000 and the applicant and his wife obtained a £600,000 mortgage.

The FSA also found Lafrance failed to adequately supervise and monitor the GFC staff who worked in the operations department and ensure that GFC staff performed their roles with skill, care and diligence.

In its final notice, the FSA says: “The FSA has found that Lafrance is not a fit and proper person to perform any controlled function involving the exercise of significant influence in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm, due to his lack of competence and capability.”

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  • seagull 21st March 2012 at 1:59 pm

    I do hope that James Bowles 21 Mar 2012 1:23 pm isn’t a broker or anyone involved in financial advice. it was the old “if the borrower says they can afford then they can” attitude that has got us into the mess we are in now.
    Hopefully the comment was a joke which, of course, mortgage fraud, tax evasion, potential reposession, money laundering are not!

  • James Bowles 21st March 2012 at 1:23 pm

    Not sure what all the fuss is about – if he said he could afford it, why not?

  • Nick Girling 21st March 2012 at 2:32 am

    His client with the motorcycle breaking business wasn’t Peter Mandelson was it?

  • Andy Wilson, Andy Wilson Financial Services 20th March 2012 at 6:20 pm

    Ah, those heady days of 25 times income multipliers. How we miss them…

  • anon 20th March 2012 at 6:20 pm

    Glad to see the FSA clamp down on people like this. I was a BDM for a lender and raised awareness of this to our internal compliance team after a member of staff at GFC stated that he believed “95% of self cert mortgages are fraudulant”!! Their business was almost entirely sel cert!!! What made this even more crazy, was he stated this to an underwriter who was out on appointments with me for the day!! Hahaha. The underwriter was there because an unusually high number of their written cases were not going to offer, this made us suspisious and things went from there. Glad to hear he has been banned.

  • Andy Wilson, Andy Wilson FS Ltd 20th March 2012 at 6:19 pm

    Ah, the heady days of 25 times income multipliers. How we moss them…