Home and County Mortgages, a firm engaged in the right to buy market, has been fined GBP52,500 by the UK Financial Services Authority for management failures, including a lack of skill, diligence and care.
The investigation discovered that one of the firm’s advisers had inflated customers’ incomes on mortgage applications and that Home and County Mortgages (HCML) did not act quickly and appropriately to deal with the matter. Weaknesses were also identified in its sales processes, including retention of customers’ income verification documents to show affordability. Consequently, this could lead to customers receiving unsuitable advice.
Furthermore, the mortgage group was discovered to be concealing the true cost of the single premium payment protection insurance (PPI) policies that it recommends, as well as failing to ensure in every case that staff followed its complaints handling process correctly and that all complaints were dealt with consistently.
Inflating customers’ incomes when applying for a mortgage is unacceptable. It puts customers at risk of losing their homes if they are not able to meet their mortgage repayments, said Jonathan Phelan, head of retail enforcement at the Financial Services Authority (FSA). It amounts to making false declarations to lenders on behalf of customers, the consequence of which could be very serious for customers.
The firm qualified for a 30% discount by agreeing to settle at an early stage of the FSA investigation and the fine was reduced from GBP75,000 to GBP52,500. HCML has taken remedial steps, and the FSA also instructed the firm to employ a skilled person to review its past business to help ensure that its customers are treated fairly.