FCA calls Upper Tribunal mortgage broker decision 'irrational'

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FCA calls Upper Tribunal mortgage broker decision 'irrational'

The Financial Conduct Authority has called a decision by the Upper Tribunal “incorrect” and “irrational” after it recommended that the regulator reconsider its recommended action against a mortgage broker.

In a statement last week (April 28), the regulator said it will seek to appeal the tribunal’s decision in relation to its investigation into Markos Markou of Financial Solutions (Euro) Limited (FSE).

The FCA alleged that between 2015 and 2017, Markou did not have appropriate oversight of FSE's mortgage business.

It said he had failed to prevent FSE from transacting mortgage business between July 2017 and October 2017, during which time it did not have valid professional indemnity insurance.

The regulator said Markou also failed to implement policies to combat mortgage fraud, and failed to properly supervise his mortgage advisers.

The business had already seen interventions by the FCA between 2011 and 2015, and the regulator said following this Markou was fully aware of the serious risks that this conduct created. 

“By ignoring the risks, the FCA believes that Mr Markou acted recklessly and demonstrated a lack of integrity,” it said. 

The FCA stated Markou’s conduct had placed FSE at risk of being used as a vehicle for financial crime and did not appropriately protect the interests of consumers.

In July 2021, the FCA made a provisional order preventing him from performing any functions in relation to any regulated activity and imposed a penalty of £25,000.

But Markou referred the decision notice to the Upper Tribunal where he and the FCA each presented their cases. 

In the tribunal, Markou said he did not act recklessly, his actions did not lack integrity and he remains a fit and proper person to perform the regulated actions for which he should remain approved.

In the judgement, given on April 27, Judge Rupert Jones said the FCA should not impose the £25,000 fine, and it should reconsider its decision to withdraw Markou’s regulatory approval.

The judge said the tribunal had “considerable sympathy” for the mortgage broker’s position, and that he did not act recklessly “but with integrity”.