FSA/PN/012/2011
25 January 2011
The Financial Services Authority (FSA) has banned five mortgage intermediaries and fined one of them £104,000. This brings the total number of mortgage intermediaries banned since December 2006 to 101.
Most of the individuals have been banned because they are not fit and proper to work in regulated financial services through failings that led to mortgage fraud.
Mark Thorogood trading as Property Park Mortgages, Colwyn Bay, North Wales and Darren Button formerly of Property Park Mortgages, Colwyn Bay, North Wales
Thorogood, the owner of Property Park Mortgages, has been fined £104,294 and banned from working in regulated financial services.
The FSA found that Thorogood had knowingly submitted fraudulent mortgage applications for himself and his wife, inflating his income from £22,950 to £120,000 and her income from £8,832 to £95,000.
In addition, Thorogood submitted two mortgage applications containing fraudulent information on behalf of a family member. In the first application he stated the family member’s income was £85,000 and in the second he stated that it was £130,000; the actual income was £17,610.90.
Thorogood also failed to have a documented system for supervising the activities of advisors at the firm. Some of the files reviewed by the FSA showed record keeping failures and a lack of evidence to support the income stated on the mortgage applications.
The FSA has also prohibited Darren Button, a former advisor at the firm, for deliberately entering false income and employment information in mortgage applications which he then submitted to lenders.
Button also attempted to conceal a customer’s true income on a payslip with correction fluid because he knew the lender would reject the application if they saw the genuine income.
Button was also aware of other fraudulent applications but took no action to prevent this as he thought ''it didn’t seem to be a huge problem''.
Daniel Djaba trading as DPD Consultancy Services, London, and Adeolu Adeosun, formerly of DPD Consultancy Services , London
Daniel Djaba, trading as DPD Consultancy Services (DPD), has been banned from performing a significant influence function in regulated financial services. He failed to have appropriate systems and controls in place at DPD, and therefore failed to prevent the firm being used to commit mortgage fraud.
Specifically, Djaba failed to ensure that one of his advisors was properly monitored, effectively allowing the advisor to submit an inaccurate mortgage application for himself.
Djaba also failed to ensure DPD gathered robust documentary evidence to support income declared by customers and submitted two applications for customers that contained misleading information.
The FSA has also prohibited Adeolu Adeosun, a former advisor at DPD, for knowingly submitting fraudulent mortgage applications for himself and intentionally misleading the FSA during an interview.
Adeosun was a self-employed advisor who provided mortgage advice to DPD’s customers. However, he was not qualified to give advice, nor had he been assessed to be a competent advisor by DPD.
In a residential mortgage application for himself in April 2008 Adeosun inflated his income for 2006 by more than eight times from £7,826 to £66,022. In a buy-to-let application for himself in 2007 Adeosun again misleadingly used gross income figures rather than net. Adeosun also misled the FSA in an interview by not telling the truth about when he stopped working for an employer.
Waheed Hanif, trading as The Broker Group, Burton upon Trent
Waheed Hanif was a sole trader at The Broker Group, conducting mortgage mediation business. He has been banned for acting dishonestly and lacking integrity.
In November 2009 Hanif was convicted by Stafford Crown Court of one count of obtaining a pecuniary advantage for another by deception and one count of obtaining a money transfer by deception. Hanif had submitted false information in his application for FSA authorisation and a false mortgage application to a lender in his own name.
Margaret Cole, the FSA’s managing director of enforcement and financial crime, said:
''Mortgage intermediaries must adhere to our rules to ensure that consumers are treated fairly and protected from excessive risk, and reduces the possibility that lenders are exposed to fraud.
''For those that don’t follow the rules the consequences are very serious. Not only might they receive a fine and a ban, but - by no longer being able to work in regulated services - they also face losing their livelihood.''
Mortgage intermediaries banned
Since the FSA began investigating intermediaries in the mortgage sector in mid 2005, it has banned 101 intermediaries. Many of these operated in London and the South East, but the FSA has taken action against mortgage intermediaries all around the United Kingdom.
•London & South East – 53 prohibitions
•North West & Wales – 20 prohibitions
•North East - 10 prohibitions
•Midlands – six prohibitions
•South & South West – six prohibitions
•Northern Ireland – four prohibitions
•Scotland – two prohibitions
Ninety five of the 101 individuals were prohibited for failings in relation to mortgage fraud. The other six’s failings included: lying to the FSA, failing to take reasonable steps to prevent their businesses from being used to commit mortgage fraud, and a serious lack of competence and capability to run an FSA-authorised firm.
Many of the 101 were fined as well as banned, with total fines amounting to £2.5 million; the biggest single fine imposed was £294,500 for a combination of mortgage and life insurance fraud.
Over the last four years the FSA’s Information from Lenders scheme has generated more than 1,000 alerts about mortgage intermediaries. Mortgage lenders participate in the scheme on a voluntary basis and the information they supply is critical in helping the FSA clamp down on dishonesty and other misconduct in the mortgage sector.
As well as lenders, the FSA has also collaborated with numerous police forces across the UK. To date, the police have successfully prosecuted six intermediaries with the FSA’s help: Stephen Jones, Gordon Benville, Leo Kusi-Appiah, Omotayo Fawole, Isah Mohammed and Dele MacAulay. More trials are scheduled for 2011.
Margaret Cole added:
''This is a significant milestone in our efforts to stop dishonest people from working in regulated financial services. By working closely with lenders and police forces, the FSA has successfully targeted numerous dishonest mortgage intermediaries and we have taken decisive action against them.
''We will continue to gather intelligence and work with other agencies to deal with dishonest intermediaries. We will use all the tools available, including unannounced visits and search warrants, where appropriate, and we will report criminal activity to the police.
''Looking ahead, changes proposed in the Mortgage Market Review will help our fight against mortgage fraud, including making it the lenders’ ultimate responsibility for assessing affordability and requiring income verification.''
This article first appeared on the FSA website: http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/012.shtml
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