Insurance firm fined £35,000 by FSA

PMSG Insurance Services Ltd, based in Darlington in County Durham, was also adjudged to have not properly managed risk.

The FSA has also withdrawn its approval for the firm's compliance officer Irene Hall, as it found she lacked the competence and capability to ensure the firm complied with FSA regulations aimed at ensuring customers are treated fairly.

Jonathan Phelan, head of retail enforcement for the FSA, said: "It is unacceptable that PMSG exposed at least 620 customers to the risk of being recommended mortgages that they could not afford or did not need.

"All firms must gather sufficient information from their customers about their needs and must organise and control their business to ensure the advice they give is suitable and customers are treated fairly."

In recommending mortgages, the FSA said PMSG failed to take fully into account its customers personal and financial circumstances.

The FSA found that customers were re-mortgaged in their existing properties without the firm being able to show they could afford the recommended deal.

Customers were also advised to re-mortgage their properties even while subject to early redemption charges which may have reduced any benefit of re-mortgaging, according to the FSA.

The City watchdog said PMSG had agreed to review its customers' files to establish whether there had been any detriment.

It will also undertake a past business review to identify any unsuitable recommendations that may have been made to its customers.

The report will also identify whether redress needs to be paid by PMSG to any of its customers.