Mortgage broker censured for financial promotions and sales-related failings
22nd May 2008The Financial Services Authority (FSA) has today publicly censured Mortgageland Limited (Mortgageland) for poor financial promotions, inadequate sales processes and record-keeping failings.
The FSA visited London-based Mortgageland and found that the firm:
- failed to give sufficient prominence to the Annual Percentage Rate in a mortgage promotion aimed at people with County Court Judgments, loan arrears or defaults;
- in another promotion, failed to indicate the level of fee that customers would be charged or set out that the fee included an amount to cover other fees which were paid by the firm on the customer's behalf; and
- in addition, failed to record appropriate details of customers' needs and circumstances including, in some cases, how customers planned to repay the mortgage and their income and expenditure details.
The FSA considered Mortgageland's failings to be serious due to the potential impact on its customers, many of whom were recorded as having adverse credit histories or were consolidating debts, or both.
Margaret Cole, Director of Enforcement at the FSA, said:
"Taking out a mortgage is one of the most important decisions anyone makes during their life. Poor practice by firms in this area poses a high risk to consumers - and this is particularly the case when it comes to sub-prime mortgages, given the vulnerable nature of the target audience.
"It is essential that firms' financial promotions are clear, fair and not misleading, so that consumers know exactly what they are buying. And poor financial promotions often go hand in hand with other problems at firms - in this case, the firm also demonstrated poor record-keeping, both in terms of assessing suitability and documenting recommendations made."
Once made aware of the FSA's concerns, Mortgageland amended its financial promotions and took steps to remedy the other failings. Mortgageland has agreed that any future mortgage-related financial promotions will be approved by an individual with appropriate expertise.
