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FSA fine broker firm 63k

Jude Buttle

The Financial Services Authority (FSA) has fined Derbyshire mortgage broker Approved Financial Solutions (AFS) £63,000 for giving unsuitable advice to customers.

The FSA stated that in a number of cases self-certification mortgages were often recommended to customers by AFS, when cheaper high street deals were more suitable.

The financial regulator found AFS also failed to inform customers of the correct procurement fees, which were higher than those given to the client.

Additionally, the AFS did not disclose to customers how much commission it earned on mortgage deals and failed to provide them with adequate suitability letters.

FSA head of retail enforcement Jonathan Phelan says: "AFS's failings were serious because its sales process enabled vulnerable customers to apply for mortgage contracts that they could not necessarily afford. In giving the mortgage advice, AFS also failed to provide customers with accurate information about the mortgage contracts. The firm's customer base is largely sub-prime and many of them were seeking to re-mortgage to consolidate existing debts.

"Behind this poor compliance regime, we found that in all the sales files that we reviewed the customers had provided AFS with false income and employment information."

The FSA's crackdown on unsuitable advice and fraud in the mortgage sector has led to 20 brokers being banned this year. 

AFS's fine was initially £90,000, but was reduced due to their early eagerness to cooperate with the FSA.