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Jake Z

Mortgage Broker Fined For Misselling

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FINANCIAL FIRM FINED £133,000 FOR SALES FAILINGS

By Nicky Burridge, PA Personal Finance Correspondent

A mortgage broker was fined today for selling insurance that customers might

never have been able to claim on and for encouraging people to remortgage even

if it meant incurring high fees.

City watchdog the Financial Services Authority (FSA) fined Hadenglen Home

Finance £133,000 and its chief executive Richard Hayes £49,000 for having

inadequate systems and controls in place when recommending remortgages and

payment protection insurance (PPI).

It is the first time the regulator has fined both a firm and its chief

executive for failings relating to remortgaging and PPI.

The FSA said Mr Hayes had implemented a sales strategy which failed to take

into account whether people who were remortgaging would be hit with early

redemption charges and other fees.

As a result people remortgaging incurred "significant charges" that may not

have been in their best interests.

At the same time he failed to ensure that sufficient information was gathered

from customers being sold PPI, which covers debt repayments if people are unable

to work or lose their job, and did not take into account the cost of this cover

when recommending it.

This meant customers were advised to buy a product that may not have been

suitable for their needs or which they would never have been able to claim on.

Overall the regulator said the group had exposed 2,000 remortgage customers and

1,900 PPI ones to an unacceptably high risk of being sold a product that was not

suitable.

Hadenglen, which is based in Ashby-de-la Zouch in Leicestershire, typically

arranges remortgages for customers with impaired credit ratings, many of whom

would find it difficult to borrow from traditional lenders.

A significant proportion of its customers had bought their homes under the

Government's right to buy scheme.

The FSA said it had also found serious weaknesses in a number of other areas

including training and senior management oversight of the business.

The problems were discovered during the second phase of the FSA's work on the

sale of PPI in May last year.

Margaret Cole, FSA director of enforcement, said: "Firms must develop and

maintain systems and controls that minimise the risk of providing unsuitable

advice to customers.

"The penalty imposed on Mr Hayes should leave senior management within firms

in no doubt that the FSA will hold them to account if they fail to treat their

customers fairly."

The regulator said the fines could have been as high as £190,000 for Hadenglen

and £70,000 for Mr Hayes had they not agreed to settle at an early stage of the

investigation.

They are also contacting customers and paying them redress where appropriate,

and they have agreed to carry out a review of their systems and controls, with

external consultants advising on the process.

Hadenglen declined to comment on the fines.

Chickens coming home to roost at last! Hopefully this won't be the last such prosecution. Shame the fines weren't higher.

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Richard Hayes is the younger brother of John Hayes who went to jail over the Swithland Motors scandal in the early 1990's.

Richard Hayes also owns Moore & York an estate agent in Loughborough.

He got away with his involvement in Swithland Motors – see below

http://www.motortrader.com/21399/SWITHLAND...D-GUILTY-.ehtml

The FSA should withdraw any licence he has immediately so he can't continue to rip poor vulnerable people off.

A leopard that hasn’t changed his spots although at least he was caught and punished this time!

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