Fines handed out to mortgage brokers for advice failings should serve to remind other firms of their obligations, the FSA has insisted.
The Financial Services Authority (FSA) has issued a stark warning to mortgage brokers that they must treat customers fairly or risk the financial repercussions. The advice comes after the watchdog fined a Doncaster mortgage broker £34,500 for failing to ensure it provided suitable advice to its customers.
According to the FSA, around 900 mortgage holders with Orchid Financial Limited were at risk of being sold mortgages unbefitting their needs between October 2005 and March 2006 due to inadequate record keeping and supervision of advisors.
Jonathan Phelan, head of retail enforcement at the FSA, said: "Orchid's failings meant they could not demonstrate that their mortgage advice and sales were suitable. This fine sends out a clear message to brokers that their advice must be of good quality - otherwise there is a likelihood that they will not be treating customers fairly."
The FSA said Orchid had cooperated fully with its investigation, which found no evidence of actual consumer detriment. It therefore qualified for a reduced penalty.
Two directors from Abbey Mortgages Limited in Bexleyheath and Stokesley have also been issued with fines from the FSA for failing to check the affordability of the mortgages being recommended to their customers, something the FSA insisted was especially important in difficult economic times.
