FSA fines broker £10,500 for self-cert errors

The FSA has fined a Chepstow mortgage broker £10,500 for failures in the sales process he used for self-certification mortgages.

Andrew Jeffreys – trading as Chepstow Financial Services – is said to have relied too heavily on customers’ declarations that they could afford the mortgage contracts.

As a result, Jeffreys did not satisfy the FSA that he had assessed the affordability of recommended mortgage contracts. He was also found not to have implemented adequate protection against mortgage fraud.

The FSA was also unsatisfied with how Jeffreys carried out the training, supervision and monitoring of advisory staff, in some instances finding failures in disclosing adequately to clients the additional fees payable as a result of his use of packagers to source products.

Jonathan Phelan, FSA head of retail enforcement, says: “Mortgage brokers are entitled to rely on information provided by customers about their incomes but asking customers to sign a declaration that they can afford the mortgage repayments does not absolve brokers from taking steps to assess and record whether the recommended contracts are affordable and suitable.

“In all of the client files we reviewed we found that the customers had made false declarations about their incomes, and Mr Jeffreys simply accepted this information at face value. Consequently his business was more at risk of being used to commit mortgage fraud.”

By agreeing to settle at an early stage, Jeffreys qualified for a 30% discount under the FSA’s executive settlement procedures, without which the fine would have been £15,000.