Mortgages  

FCA successful in action against unauthorised mortgage brokers

FCA successful in action against unauthorised mortgage brokers

The Financial Conduct Authority has obtained a High Court judgement against two men who exploited vulnerable people by arranging unauthorised mortgages for personal gain.

A trial will now be held to consider remedies, including compensation for the victims of Daniel Stevens and his father Tony Stevens, who were directors of London Property Investments and NPI Holdings.

This trial will also hear evidence from a further 88 people who dealt with both firms and were not part of the FCA’s initial claim.

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The High Court found the two men arranged high-interest, unaffordable bridging loans for at least 45 people who were about to be evicted from their homes. 

In some cases, the defendants bought homes for less than their value from owners who were facing repossession and then rented the properties back to these consumers, charging huge fees for their service.

The defendants were not authorised to arrange mortgage contracts or sale and rent back agreements. 

The judge, Richard Smith, described these breaches as "exploitative of vulnerable individual consumers" and he found they were undertaken "to obtain significant personal gain".

LPI is now required to remove around 22 restrictions registered against the individuals’ properties, which were used to force individuals to pay “exorbitant fees” to LPI.

In some cases the restrictions trapped individuals into high-interest bridging loans.

If the restrictions were not paid, the individual would be unable to sell or remortgage their property. In some cases, this trapped individuals into high interest bridging loans.  

Mark Steward, the FCA’s executive director of enforcement and market oversight, said: “These companies and individuals were not just providing financial services without proper authorisation, they were doing it to take advantage of people who were struggling and in vulnerable circumstances.”

He added: "Their actions cost consumers large amounts of money in fees, inflated loan interest and lost equity in their homes.”

The regulator first obtained an interim injunction and freezing order against the two companies in July 2020 to stop the firms’ activities and freeze the residential properties and other assets owned by the Stevens.

jane.matthews@ft.com