FSA fines lifetime mortgage adviser

NEWCASTLE-UPON-TYNE - The UK Financial Services Authority (FSA) has fined mortgage provider Minel £10,500 for selling unsuitable equity-release mortgages to customers. FSA visits found persistent failures in record-keeping, systems and controls. It marks the first time the FSA has fined a lifetime mortgage provider. The Newcastle-based lender must review all lifetime mortgage sales between November 9 2004 and December 9 2005, compensate customers for unsuitable advice given, and cease selling all lifetime mortgages.

The FSA, while conducting thematic work on equity-release advice, found that Minel had inadequate procedures in place to control its equity-release mortgage business and the quality of advice given to customers. It also failed to record enough personal and financial information from customers to give sound advice or justify its recommendations. In addition, although lifetime mortgages are a higher risk product, Minel had not provided specific training and competence procedures or taken steps to effectively monitor staff competence. The FSA says it remains concerned about higher risk products, and warns firms must have appropriate systems and controls in place, or they will be held to account should they fail to treat their customers fairly.