The FSA has also banned the pair from performing significant influence functions in the future. Latham has also been fined £17,500.
Fastmoney arranged regulated mortgage contracts, including regulated bridging loans, on a non-advised basis for retail customers. Between August 2005 and March 2010, Fastmoney arranged 370 regulated mortgage contracts and 18 regulated bridging loans for customers. There were deficiencies in Fastmoney’s non-advised sales process which put its customers at risk of taking out mortgage contracts whose features, risks and costs they did not sufficiently understand. These deficiencies were first identified by the FSA during a supervisory visit after which the firm was referred to enforcement.
In particular, the FSA found that Fastmoney failed to:
o establish a non-advised sales process which ensured customers took out an appropriate mortgage and were treated fairly;
o ensure sales staff were competent, adhered to non-advised sales scripts and avoided giving personal recommendations to customers;
o present all options to the customer in a fair and unbiased way, without recommending a specific product based on its own judgment;
o ensure customers understood all the details of their product, particularly those who took out bridging loans; and
o disclose clearly the cost of its services.
In addition, Latham and Mason failed in their oversight of the business. Latham delegated senior management functions to Mason who did not have the necessary knowledge, skill or understanding of the regulatory system to deal with the responsibilities. Both failed to supervise, monitor and train staff adequately, and to identify and mitigate risks posed by the business, such as potentially inappropriate sales of bridging loans and inadequate disclosure of fees.
The FSA considers Fastmoney’s failings to be particularly serious because its customers were typically financially unsophisticated people with an adverse credit history. In some cases, customers needed to obtain a loan urgently to avoid having their homes repossessed.
Because of their circumstances, the impact of poor financial decisions was magnified. The FSA has required Fastmoney to appoint a skilled person to assess the extent of any customer detriment which may have been caused by the firm’s failings and pay customer redress if appropriate. That process is ongoing.
Fastmoney and Latham agreed to settle at an early stage of the FSA’s investigation and qualified for a 30% discount. Were it not for this discount, the FSA would have imposed a financial penalty of £40,000 on Fastmoney and £25,000 on Latham.
Tom Spender, head of retail enforcement at the FSA, said: “Firms and their senior management cannot absolve themselves from responsibility for a mortgage sale because they have chosen to sell on a non-advised basis. They must ensure communications with customers are clear, fair and not misleading and that they do not sell a product which is inappropriate for that customer. This is particularly important where those customers are vulnerable, in arrears or facing repossession – it is unacceptable to target such customers and offer products such as bridging loans without giving proper consideration to the firm’s obligation to treat customers fairly.”
