FSA fines PMSG Insurance Services Ltd GBP35,000 and withdraws approval for its compliance officer for mortgage advice breaches
23rd July 2008FSA/PN/076/2008
23 July 2008
The Financial Services Authority (FSA) has fined PMSG Insurance Services Ltd GBP35,000 for failing to ensure advice given to customers was suitable and for not organising its business responsibly and to properly manage risk.
The FSA has also withdrawn its approval for the firm's compliance officer, Irene Hall, as it found she lacked the competence and capability to ensure the firm complied with FSA regulations aimed at ensuring customers are treated fairly.
Jonathan Phelan, FSA head of retail enforcement said:
"It is unacceptable that PMSG exposed at least 620 customers to the risk of being recommended mortgages that they could not afford or did not need. All firms must gather sufficient information from their customers about their needs and must organise and control their business to ensure the advice they give is suitable and customers are treated fairly."
In recommending mortgages, PMSG failed to take fully into account its customers personal and financial circumstances, for example:
- customers were re-mortgaged in their existing properties without the firm being able to show they could afford the recommended deal;
- customers were advised to re-mortgage their properties while they were still subject to an early redemption charge which may have reduced any benefit of re-mortgaging;
- the firm did not seek to verify information provided by customers which was inconsistent with information provided by them at an earlier point in the sales process; and
- the firm failed to retain sufficient records of information about its customers to prove the suitability of the advice it gave them.
The firm has agreed to review its customers' files to establish whether there has been any detriment and will undertake a past business review to identify any unsuitable recommendations that may have been made to its customers. The report will also identify whether any redress needs to be paid by PMSG to any of its customers.
