Broker fined and brokerage banned by increasingly tough FSA

Broker fined and brokerage banned by increasingly tough FSA


The FSA has fined a mortgage broker £14,000 and banned a brokerage from practicing after they failed to be “open and co-operative with their dealings”.         

David Roberts, sole director of A-Z Mortgages Limited, has been fined, whilst brokerage Hygeia Mortgages and Finance Limited(Hygeia)has had its permission to undertake regulated activities cancelled.


In a statement released by the regulator, the FSA said Roberts had been “fined for failing to put in place adequate systems and controls at A-Z, and failing to be fully open with the FSA about business practices at A-Z and the action he was taking to correct systems and controls failings.


“The FSA’s Small Firms and Contact Division identified a series of systems and controls failures, which occurred between 28 November 2006 and 31 August 2009.”


These included the company failing to put adequate systems and controls in place to identify mortgage applications which contained false or misleading information.


A-Z was also reprimanded for failing to keep adequate records so as to explain any changes in customers’ circumstances and to show that the advice and product recommendations made by A-Z were suitable.


The FSA also found A-Z failed to adequately monitor the activities of an adviser who put business through the firm.


Roberts had been approached about the firm’s shortcomings in 2006, but assured the FSA that he would correct the failings. However, many of the same failings were identified again in 2009, which led to the fine and banning.


The FSA believes Roberts’ case to be “particularly serious as it meant that customers were at risk of receiving unsuitable advice and, for a period of time, A-Z was at risk of being used for financial crime”.


The FSA cancelled Hygeia’s permission to undertake regulated activities for failing to satisfy threshold conditions. The FSA found that the firm had inadequate capital resources in relation to the regulated activities it had permission to carry on.


In addition, Hygeia failed to co-operate by repeatedly refusing to allow the FSA to carry out a supervisory visit. Hygeia also failed to provide information to the FSA, despite repeated requests that it do so. The FSA concluded that Hygeia had failed to ensure that its affairs are conducted soundly and prudently, and in compliance with proper standards. 


Tom Spender, the FSA’s head of retail enforcement said: “Authorised firms are obliged to deal with the FSA in an open and co-operative way. 


“David Roberts failed to ensure that the correct systems and controls were in place, even though we had highlighted where improvements needed to be made. He failed to be fully open with us about the actual business practices at A-Z Mortgages, often talking aspirationally rather than realistically.


“Hygeia repeatedly refused to co-operate with the FSA, failing to provide information requested by the FSA and refusing to allow the FSA to carry out a supervisory visit. Failure to accommodate a supervisory visit and provide information to the FSA is unacceptable behaviour for any authorised firm.  The FSA will not tolerate such behaviour and has taken action to cancel the permission of Hygeia as a result.


“These actions demonstrate what will happen if firms are not open and co-operative with the FSA.”


Roberts agreed to settle at an early stage of the FSA’s investigation and qualified for a 30 per cent discount under the FSA's settlement discount scheme. The financial penalty of £14,000 reflects this discount. Without the discount, the financial penalty would otherwise have been £20,000.




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