Two UK mortgage brokers banned over TCF failures


The UK Financial Services Authority (FSA) has banned two mortgage brokers in separate cases only weeks apart for failing to treat customers fairly (TCF). Aaron Nickols was banned from selling mortgage and general insurance products, after he used high-pressure sales techniques and failed to monitor staff adequately to ensure clients were treated fairly. Separately, the regulator said it had banned Noel Heaney after finding wide-ranging management and control problems across his firm and for failing to treat his customers fairly.

The FSA said Nickols, trading as Warwick Finance, was not fit and proper to run a mortgage and insurance business. He also failed to deal honestly with the FSA by making incorrect statements and not carrying out the improvements he had promised to make to the firm’s treatment of customers. The firm’s high-pressure sales approach included making unsolicited phone calls to the public, falsely claiming to represent well-known high street financial service providers and questioning the stability of customers’ existing policy providers to encourage the purchase of a new policy through Warwick. Staff also obtained direct debit details from potential customers and set up insurance policies in their names without permission. Customers’ specific needs were often not taken into account and training for staff was inadequate.

“By failing to treat his customers fairly, lacking the essential systems and controls to meet the FSA’s minimum regulatory requirements, and having an inappropriate attitude to the remedial action we outlined, Nickols poses a genuine risk to his customers and the financial system,” said Tom Spender, FSA head of retail enforcement. “High-pressure sales techniques and subterfuge have no place in a market that relies on honesty and integrity.”

Sanctions for high-pressure sales have been rare for small mortgage brokers, though more common for stock brokers, according to financial sources. The FSA’s enforcement actions should be seen in the wider context of an increasingly hawkish stance on its TCF regime. “If you want to conduct business, you must treat your customers fairly,” says Toby Parker, an FSA spokesperson. “Obviously we’re looking more into [this type of issue]. It is part of our move towards a tougher FSA enforcement team.”

The enforcement action against Heaney, trading as Heaney Finance in Lisburn, Northern Ireland, marks another example of TCF enforcement against a small firm. The FSA complained Heaney entrusted the management of his firm to an inexperienced employee, and then failed to provide training and support, combined with a lack of management information that could have helped him be informed about business conducted in his name. The regulator says this operational risk failing of weak controls in turn created the further risk of the firm being used by third parties to commit mortgage fraud. Furthermore, despite receiving advice from two compliance consultants as well as the regulator itself, he failed to rectify the failings or put a complaint handling procedure into effect.

“This case also highlights the effectiveness of our small firms’ assessment programme, where we engage with responsible small firms operating in the UK retail markets who recognise they have obligations to their retail customers. But, to continue helping consumers we must also continue to deal robustly with the firms and individuals who do not engage with us to ensure the fair treatment of their customers,” said Margaret Cole, the FSA’s director for enforcement and financial crime.

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