FTAdviser.com

Advertising

Leybridge, of Bath Road, Bournemouth, was unable to pay the proposed fine of £24,000, and the FSA therefore waived the fine in order to ensure that Leybridge could afford to compensate customers who might have been disadvantaged.

The regulator said this was the first of several enforcement cases to arise from a thematic project looking into the quality of advice processes in mortgage brokers undertaken by the FSA's small firms and contact division earlier this year.

According to the FSA, Leybridge failed to ensure that it made and retained adequate records of its customers' personal and financial information in a number of key areas of the business.

Widespread record keeping failures identified by the FSA have led to the firm being unable to demonstrate that the advice given to customers was suitable.

The City watchdog also discovered that the firm employed inadequate file checking systems whereby sales advisers and mortgage processors would check each file for the existence of requisite documentation, not the standard of its completion.

Directors would then check only a sample of files and did not do so on a regular or adequate basis.

The FSA said there was no adequate system in place for directors to record that files had been reviewed.

Margaret Cole, FSA director of enforcement, said: "Leybridge's record keeping was so poor that they could not demonstrate that the sales of mortgages were suitable and had no way of proving to us that the firm was treating its customers fairly.

"We would have imposed a fine of £24,000, but, had we done this, the firm would not have been able to afford properly to carry out a customer redress exercise.

"The FSA decided that the priority was to ensure customers received a fair deal and so we waived the fine on this occasion."