Two Tyne & Wear mortgage brokers have been banned and publicly censured by the FSA for business failures that could have led clients to take out unsuitable mortgages.

Edward and Ronald Allen, brothers and directors of the firm Homeplan, failed to collect relevant customer information and check that mortgage advice at their company was up to standard. They also failed to ensure that recommendations provided were appropriate for the customer.

In addition, adequate monitoring of Homeplan’s sales of mortgage contracts was not undertaken and proper management information was not given. Edward Allen was also censured for not delegating his direction and oversight of the business effectively while he was away on an extended period of absence.

The FSA first identified these problems back in 2006, but since then the brothers had not taken any action to rectify the situation. Although these failings normally warrant a £15,000 fine, the FSA said that the brokers would “suffer serious financial hardship if this financial penalty was imposed” and so therefore have issued a public censure in its place. The regulators have also cancelled the trading permission of Homeplan.

“Both directors lacked the competence and capability needed to make sure their firm delivered good quality mortgage advice,” said Jonathan Phelan, head of retail enforcement at the FSA.