RegulationMay 2 2013

FCA bans directors of mortgage firm

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According to a notice by the City regulator, the directors’ lack of due diligence meant false payslips were submitted to mortgage lenders.

Douglas Jones received a full ban and a financial penalty of £19,000, reduced to £13,000 due to early settlement, for misleading the FCA on the firm’s regulation of mortgage applications by altering historic client files.

His son Derek Jones will no longer be allowed to hold any significant role within a financial firm but was not fined after proving financial hardship.

In the FCA decision notice, Bill Sillett, acting head of department for retail enforcement, said: “This is another example of a case involving the submission of false and misleading information for mortgages to lenders to try and obtain mortgages fraudulently.

“Mortgage fraud poses a serious threat to the FCA’s integrity objective of protecting and enhancing the integrity of the financial system. This includes ensuring that a firm is not being used for a purpose connected with financial crime.”

Which Mortgage is currently under the management of new directors who were not involved in the misconduct.

The action comes a month after accountancy firm Ernst & Young revealed that the mortgage market in the UK accounted for the largest number of fraud investigations, with 114 cases since 2007, equating to 23 per cent of the total investigations.

Adviser view

Ruth Whitehead, principal of London-based Ruth Whitehead Associates, said: “The financial services industry is huge in this country and heavily regulated. While all fraud is bad, I’d be interested to see how these fines compare to the total turnover of financial services in the UK as I would imagine it would be a very small percentage.”