FSA fines Chepstow mortgage broker for failures relating to self certification mortgages
10th June 2008The Financial Services Authority (FSA) has fined Andrew Jeffreys (trading as Chepstow Financial Services) GBP10,500 for failures in the sales process he used for self certification mortgages.
Mr Jeffreys relied too heavily on customers' declarations that they could afford the mortgage contracts and did not satisfy the FSA that he had assessed the affordability of recommended mortgage contracts. These failures arose because he did not put in place adequate procedures to counter the risk of his business being used by customers to commit mortgage fraud.
He was also not able to demonstrate to the FSA's satisfaction how he carried out the training, supervision and monitoring of advisory staff and in some instances he failed to disclose adequately to clients the additional fees payable as a result of his use of packagers to source products.
Jonathan Phelan, FSA Head of Retail Enforcement, said:
"Mortgage brokers are entitled to rely on information provided by customers about their incomes, but asking customers to sign a declaration that they can afford the mortgage repayments does not absolve brokers from taking steps to assess and record whether the recommended contracts are affordable and suitable.
"In all of the client files we reviewed we found that the customers had made false declarations about their incomes, and Mr Jeffreys simply accepted this information at face value. Consequently his business was more at risk of being used to commit mortgage fraud."
These failings were found during a series of visits to mortgage brokers last year by the FSA which focused in particular on self certification mortgages and affordability of mortgage advice. By agreeing to settle at an early stage Mr Jeffreys qualified for a 30% discount under the FSA's executive settlement procedures - without the discount the fine would have been GBP15,000.
