The Financial Conduct Authority (FCA) has commenced civil proceedings against two firms and their director in relation to alleged unauthorised regulated mortgage contracts and sale and rent back agreements.
The FCA announced today (July 13) it had taken London Property Investments (UK) Limited (LPI), NPI Holdings Limited (NPI), their director Daniel Stevens, and Mr Stevens’ father Anthony Kafetzis to the High Court.
The regulator alleges that LPI and NPI carried out regulated mortgage activities in the UK without FCA authorisation, and that LPI had made financial promotions without the required authorisation.
The regulator has also secured an interim injunction stopping these activities from continuing, and a restraint order freezing 17 residential properties as well as the defendants’ other assets.
The regulator believes the defendants’ activities have affected dozens of individuals, some of which were “highly vulnerable” and might have lost hundreds of thousands of pounds to the defendants.
It alleges Mr Stevens and Mr Kafetzis were knowingly concerned in LPI and NPI’s contraventions.
According to the FCA, LPI provided services to “financially distressed individuals who face eviction from their homes or who have recently been evicted”.
These services included dealing with possession proceedings brought by mortgage lenders and arranging replacement finance with third-party lenders, “ostensibly to enable the individuals to remain in their homes”.
It added that replacement loans “would not be explained to the individuals, but are typically high-interest and for amounts greater than the individual’s existing loans, leading to even greater indebtedness”.
Furthermore, the regulator alleged that individuals would be asked to sign a consent to allow LPI to register a restriction over the individual’s property at the Land Registry.
It said: “This would also not be explained but, when the individual would attempt to sell their property, LPI would demand a large fee (up to 35 per cent of the property value) to remove the restriction before any sale can go ahead”.
The FCA added that LPI would tell individuals that it had found another company, NPI, which would buy their house and then rent it back to them.
Finally, the regulator said Mr Stevens was the sole shareholder and director of both companies, but this relationship would not be explained to individuals.
The FCA is asking the High Court to return ownership of properties to affected individuals, restitution for individuals who suffered losses as a result of the defendants’ actions, declarations from the court stating that the defendants acted illegally, and injunctions to prevent further breaches in the future.
According to the regulator, the court proceedings were at an early stage, with a date yet to be set for trial.
The alleged breaches are section 19 of the Financial Services and Markets Act (FSMA) 2000 - carrying on regulated activities in the UK without FCA authorisation or exemption - and section 21 of the FSMA - communicating financial promotions without the required authorisation or approval.