FSA Closes one UK Firm and FINES two others

LONDON - The UK Financial Services Authority (FSA) has banned Derry-based broker John Paul Keay from trading for failing to prevent mortgage fraud. Keay's business, Jack Keay Mortgage Services, was found incompetent and incapable of performing regulated functions, including providing mortgage advice. The firm's business has now been cancelled. The FSA said although the firm was small in operation, it was run without adequate systems and controls, making the firm a target for mortgage fraudsters. Keay's business was used for the submission of mortgage applications containing false information and supported by falsified pay slips, bank statements and employer references.

When risks were highlighted by the FSA, the firm made no attempt to mitigate them.

Meanwhile, securities firm Mansion House was fined £122,500 for giving consumers poor and unsuitable advice while selling high-risk shares. The FSA had reviewed 30 recommendations made by the firm between May 2006 and January 2007 and found that not only was its advice poor and inappropriate but also that it used inappropriate sales practices to pressure customers into buying. The firm did not have proper compliance procedures in place and failed to train staff properly, while it also failed to disclose the commissions and charges it received in relation to the shares sold. The firm has launched an external investigation into its procedures and compensation for consumers.

The FSA has also fined third-party administration firm Liberata £525,000 for acting recklessly in failing to protect 1.3 million life and pensions policyholders. Investors risked not receiving important information to inform their decisions. About 30,000 policyholders were directly exposed and 161 suffered financial loss amounting to £17,584 in total. The firm has since changed its senior management and launched an external review of its systems. It has also compensated the affected policyholders.