MORTGAGE PPI BROKER IS FINED OVER IRREGULARITIES
A mortgage broker has been fined for encouraging people to remortgage their homes, even when it meant incurring excessive fees.
The Financial Services Authority (FSA) fined Ashby firm Hadenglen Home Finance £133,000 and chief executive Richard Hayes £49,000 for having inadequate controls in place when recommending deals.
The fines were also imposed for selling payment-protection insurance (PPI) that customers might not have been able to claim on.
This is the first time the regulator has fined both a firm and its chief executive for failings relating to remortgaging and the payment of insurance.
Yesterday, the FSA said Mr Hayes had a sales strategy that failed to take into account whether people remortgaging would face early-redemption charges and other fees.
As a result, many incurred “significant charges” that might not have been in their best interests.
At the same time, he failed to ensure sufficient information was gathered from customers being sold PPI, which covers debt repayments if people cannot work or lose their job.
He also failed to take into account the cost of cover when recommending it.
It meant customers were advised to buy a product that might not have been suitable, or which they would not have been able to claim on.
Overall, the regulator said the group had exposed 2,000 remortgage customers and 1,900 payment-protection insurance customers to an unacceptably high risk of being sold the wrong product.
Hadenglen typically arranges remortgages for customers with poor credit ratings.
Many had bought their homes under the Government’s right-to-buy scheme.
The problems were discovered in May last year.
Margaret Cole, FSA director of enforcement, said: “Firms must develop and maintain systems and controls that minimise the risk of providing unsuitable advice. The penalty imposed on Mr Hayes should leave managers in no doubt that the FSA will hold them to account if they fail to treat customers fairly.”
The regulator said the fines could have been as high as £190,000 for Hadenglen and £70,000 for Mr Hayes had they not agreed to settle at an early stage of the investigation.
The company is contacting customers and paying redress where appropriate, and has agreed to review its systems and controls, with external consultants’ advice.
Hadenglen declined to comment on the fines.