Financial Services Authority Gets Tough

Otherwise known as the FSA, the Financial Services Authority was set up by the government but is an independent company, whose role it is to regulate the Financial Services Industry, which include banks, building societies, financial advisors and mortgage brokers.

Following up on claims that several companies offering mortgages were not providing their customers with consistent or comprehensive facts to allow them to make informed decisions, and as a result the FSA have now fined 3 companies for their inadequate services and possible mis-selling of mortgages.

The Loan Company, which trades as Greenhill Finance, and Next Generation Mortgages have both been fined between £10,000 and £30,000 whilst Homebuyer Securities Ltd has been told to cease to trade.

The investigations which took place in Summer 2007, found a lack of training of staff, inadequate record keeping, lack of advice to clients about the full details and risks on the mortgages offered, as well as a lack of background knowledge of their customers to make sure they could actually afford the mortgage they were being given.

This has even led to one of the companies withdrawing its self-certification mortgage. It is such a shame that the few greedy can ruin the chances for so many people. The next investigation will be to see if any clients have suffered losses through unsuitable and inadequate advice. If there is proof of this, it could lead to compensation claims, however it is likely to take a while to reach any conclusions.

Another issue the FSA may need to look into soon is the mortgage cold calling scams that seem to be taking place. This is completely against FSA regulations, however there are big profits to be made and many people are taking advantage knowing that any fine the FSA delivers will probably just be a fraction of what they have actually gained.